Property Market 2019

rireland

beauf wrote: »

Those rules are preventing you from buying something you can't afford. They are also stopping banks from unsustainable loans.

How can you not realise this.... when banks lifted those rules last time the market went super Nova.

High rents are a different issue. That's lack of supply and increased demand.

the market went super Nova.

The market is already supernova!

This generation literally can not buy without money from parents, a massive deposit or a massive salary. Actually, I have a massive deposit, slightly above average industrial wage and I still can't afford it!

beauf

rireland wrote: »

Why do people always reply with this?

Even if the full 15% (which is high) was spent on rent, it's still massively beneficial to get a mortgage at prices 15% lower.

Example: House now worth 300k v house worth 15% less (255k). 30k deposit for both.

Total payment over 30 year mortgage:

300k house = €409,680
255k house = €346,860

So that's an increase of about 18%. That 63k difference is nothing to be sniffed at.

Quite a modest difference considering interest rates will have to go up sometime and spending 45k on rent would cover a number of years.

I wonder if anyone had done this calculation if moving to England.

beauf

rireland wrote: »

The market is already supernova!

This generation literally can not buy without money from parents, a massive deposit or a massive salary. Actually, I have a massive deposit, slightly above average industrial wage and I still can't afford it!

So what you need is to over extend buy a place then the market to crash. You be in negative equity for 15 yrs and perhaps have a drop in salary and lose your job in the crash.

I don't get the whole generation thing. It was much the same for my generation, except most of us decided to emigrate. 2/3 of my college class emigrated. Most never returned.

For some reason this generation thinks they all should be able to buy a property, and live in Dublin. They are blind to the economic realities of life. They see all this immigration and emigration and think it doesn't apply to them.

The govt only sees it's native population as a means of generating tax. It cares nothing for your welfare. Health, housing, pensions, just a waste of money. If they can attract a better skilled cheaper workforce here, people who will work two jobs, and companies that will subside their staff housing. The govt wants that. It's economic policy.

All I'm saying is there are better opportunities and a richer life experience by broadening your horizons.

aloooof

rireland wrote: »

Stupid CB rules mean I have to get a salary increase of 50%....that's only if house prices stay at current levels too.

rireland wrote: »

Quite a modest difference considering interest rates will have to go up sometime

You're suggesting the lending rules are stupid, yet acknowledging interest rates will have to go up sometime. Can you see the conflict here? Have you worked out your repayments if the interest rates increased by, say, 1%?

SozBbz

rireland wrote: »

Why do people always reply with this?

Even if the full 15% (which is high) was spent on rent, it's still massively beneficial to get a mortgage at prices 15% lower.

Example: House now worth 300k v house worth 15% less (255k). 30k deposit for both.

Total payment over 30 year mortgage:

300k house = €409,680
255k house = €346,860

So that's an increase of about 18%. That 63k difference is nothing to be sniffed at.

Quite a modest difference considering interest rates will have to go up sometime and spending 45k on rent would cover a number of years.

Because its all money you that you need to spend to maintain a roof over your head?

300k house = €409,680
255k house = €346,860 + Rent X however many years you spend trying to beat the market.

2 years could become three, four, five depending on either changes in your own circumstances and/or changes in market circumstances.

Also you could spend so long waiting to buy that your age begins to count against you. I know people now who were not ready to buy previously but now can only get shorter term mortgages because of their ages.

You can't control everything around you and you can't guarantee that the assumptions that todays calculations are based on will be valid at a given point in the future.

rireland

beauf wrote: »

Those rules are preventing you from buying something you can't afford.

Eh....I can afford it.

If I lose my job on a 250k mortgage or a 150k mortgage I won't be able to afford it either way...

rireland

beauf wrote: »

So what you need is to over extend buy a place then the market to crash. You be in negative equity for 15 yrs and perhaps have a drop in salary and lose your job in the crash.

I don't get the whole generation thing. It was much the same for my generation, except most of us decided to emigrate. 2/3 of my college class emigrated. Most never returned.

For some reason this generation thinks they all should be able to buy a property, and live in Dublin. They are blind to the economic realities of life. They see all this immigration and emigration and think it doesn't apply to them.

The govt only sees it's native population as a means of generating tax. It cares nothing for your welfare. Health, housing, pensions, just a waste of money. If they can attract a better skilled cheaper workforce here, people who will work two jobs, and companies that will subside their staff housing. The govt wants that. It's economic policy.

All I'm saying is there are better opportunities and a richer life experience by broadening your horizons.

Negative equity does not matter at all. I don't know why it's such a big talking point. If someone is in negative equity, that's the risk they took when buying.

It's the same if I bought a house that turned out to be a ****ty location and I couldn't sell the house

rireland

aloooof wrote: »

You're suggesting the lending rules are stupid, yet acknowledging interest rates will have to go up sometime. Can you see the conflict here? Have you worked out your repayments if the interest rates increased by, say, 1%?

Interest rate repayments will affect the higher mortgage much more than the lower one.

And yeah, I could take a 1% increase in rate and still be paying less on a big mortgage than I pay on rent.

SozBbz

rireland wrote: »

Eh....I can afford it.

If I lose my job on a 250k mortgage or a 150k mortgage I won't be able to afford it either way...

No you really can't.

Truly affording a mortgage means affording it under a position of stress. If rates went up by 2% how would you fare?

The CB rules make absolute sense and are there to protect people like you from yourself.

If the restrictions were going and we were back at the 9x salary multipes that were common pre crash, then guess what? House prices would go through the roof.

Banks and Developers would profit.

What matters is what you can afford relative to others chasing the same houses. If the restrictions are removed for you, they're removed for those around you too. You're still in the exact same position, only now the number you need is hugely inflated.

rireland

SozBbz wrote: »

No you really can't.

Truly affording a mortgage means affording it under a position of stress. If rates went up by 2% how would you fare?

The CB rules make absolute sense and are there to protect people like you from yourself.

If the restrictions were going and we were back at the 9x salary multipes that were common pre crash, then guess what? House prices would go through the roof.

Banks and Developers would profit.

What matters is what you can afford relative to others chasing the same houses. If the restrictions are removed for you, they're removed for those around you too. You're still in the exact same position, only now the number you need is hugely inflated.

If there's job losses tomorrow no one will struggle so, considering everyone has been stress tested?

The CB rules are to protect the bank, not the people. This generation are getting screwed over by having them forced to rent insane rents.

duffman13

rireland wrote: »

Eh....I can afford it.

If I lose my job on a 250k mortgage or a 150k mortgage I won't be able to afford it either way...

Your more likely to lose your job during a downturn though and the banks exposure on 150 over say 250 is what's taken into account. Either way if you lose your job you are in trouble, I take your point if you had 150k mortgage it's obviously better but your not going to see a correction of 100k in a property. Prices may drop, I'd say 2nd hand properties might drop by 10% but demand is there at the moment albeit reduced a little recently so expecting a huge post brexit slump particularly in Dublin is naive IMO.

The central bank rules stop someone getting a mortgage and leaving huge exposure to the financial sector. You might have a great deposit but if your earning say 30k a year and have a mortgage of 200k that's not prudent in any world regardless of the deposit you have.

If you've a recession proof job (civil service etc) and a good chunk of a deposit then by all means wait for the correction you think will happen and keep saving in the mean time. Otherwise try increase your earning potential if possible

duffman13

rireland wrote: »

If there's job losses tomorrow no one will struggle so, considering everyone has been stress tested?

The CB rules are to protect the bank, not the people. This generation are getting screwed over by having them forced to rent insane rents.

Sorry but it's to protect both, banks need to be regulated as they made an arse of the country. People need to be regulated because they carried away with themselves. As much as the banks are vilified and rightly so, the last economic crash was a result of the greed and human nature of everyday people.

As regards stress testing, it's to test people's income for an increase in interest rates, if anyone losses a job tomorrow they will be in trouble. Stress testing isn't for that

rireland

duffman13 wrote: »

Your more likely to lose your job during a downturn though and the banks exposure on 150 over say 250 is what's taken into account. Either way if you lose your job you are in trouble, I take your point if you had 150k mortgage it's obviously better but your not going to see a correction of 100k in a property. Prices may drop, I'd say 2nd hand properties might drop by 10% but demand is there at the moment albeit reduced a little recently so expecting a huge post brexit slump particularly in Dublin is naive IMO.

The central bank rules stop someone getting a mortgage and leaving huge exposure to the financial sector. You might have a great deposit but if your earning say 30k a year and have a mortgage of 200k that's not prudent in any world regardless of the deposit you have.

If you've a recession proof job (civil service etc) and a good chunk of a deposit then by all means wait for the correction you think will happen and keep saving in the mean time. Otherwise try increase your earning potential if possible

Well all I have is hope, considering it's impossible for me to get a mortgage at current levels.

"wait for a correction" - I have no choice. Literally impossible to buy.

beauf

rireland wrote: »

Eh....I can afford it.

If I lose my job on a 250k mortgage or a 150k mortgage I won't be able to afford it either way...

duffman13 wrote: »

....
As regards stress testing, it's to test people's income for an increase in interest rates, if anyone losses a job tomorrow they will be in trouble. Stress testing isn't for that

If two people buy a property and one loses a job, or has their income reduced. They might be able to manage. One person on their own is a much higher risk.

if it all goes south, both then borrower and the bank lose out. if they let too many do it, as is lift the rules, then the knock on risks are increased massively for everyone.

Graham

rireland wrote: »

If there's job losses tomorrow no one will struggle so, considering everyone has been stress tested?

Stress tests prevent people from borrowing the absolute maximum they can afford in monthly repayment. Theoretically this leaves them with a cushion to protect themselves against interest rate rises or minor changes in personal circumstances.

The deposit requirements limit the potential for negative equity should there be a drop in house prices.

Without these safeguards it is all to easy for borrowers/lenders to lose the run of themselves, particularly in a rising market. You don't have to look too far back to see the consequences.

rireland wrote: »

The CB rules are to protect the bank, not the people. This generation are getting screwed over by having them forced to rent insane rents.

CB rules protect borrowers/lenders and the state.

rireland

duffman13 wrote: »

Sorry but it's to protect both, banks need to be regulated as they made an arse of the country. People need to be regulated because they carried away with themselves. As much as the banks are vilified and rightly so, the last economic crash was a result of the greed and human nature of everyday people.

As regards stress testing, it's to test people's income for an increase in interest rates, if anyone losses a job tomorrow they will be in trouble. Stress testing isn't for that

Eh no, banks are there to protect the banks.

There's a reason banks have been told to offload underperforming loans.

beauf

I like the way buying outside of Ireland or Dublin just isn't considered. No lateral thinking whatsoever.

SozBbz

rireland wrote: »

If there's job losses tomorrow no one will struggle so, considering everyone has been stress tested?

The CB rules are to protect the bank, not the people. This generation are getting screwed over by having them forced to rent insane rents.

Nope, you're missing the point entirely.

People will not be as stretched as they were the last time. My mortgage is manageable. I could probably keep paying it for a number of years based on savings etc. People are not as over extended/high on credit as in 2007/8.

The banks do not want these rules -they constrain their ability to lend, thus constraining their ability grow their businesses and to make profit.

Also the rental crisis would get worse in a crash. Demand far exceeds supply. If prices fall, developers will simply stop building. Some people will emigrate, sure, but generally speaking the stock of property will continue to be insufficient which is whats driving high rents.

beauf

rireland wrote: »

Eh no, banks are there to protect the banks.

There's a reason banks have been told to offload underperforming loans.

You just aren't listening. Or learning from the past.

beauf

SozBbz wrote: »

...
Also the rental crisis would get worse in a crash. Demand far exceeds supply. If prices fall, developers will simply stop building. Some people will emigrate, sure, but generally speaking the stock of property will continue to be insufficient which is whats driving high rents.

Lanlords will sell up to buy back in when the market bottoms out.

....or when theres some protection for LL's introduced.

Be interesting to see what the funds do. They are locked in with the Tyrrelstown Amendment. It will probably won't be a crash though. So they'll just weather it. Profits are so high anyway.

Ush1

The crash worked for me. When I graduated from college it was peak boom and I was thinking I would get a nice apartment. I started saving, the crash happened, didn't lose my job so kept saving and bought a house in 2012 for 185k, it's now valued at 325k.

It was sheer luck but I was resigned to be only able to afford an apartment on my own but was delighted to be able to buy a 3 bed semi on my own.

ELM327

Ush1 wrote: »

The crash worked for me. When I graduated from college it was peak boom and I was thinking I would get a nice apartment. I started saving, the crash happened, didn't lose my job so kept saving and bought a house in 2012 for 185k, it's now valued at 325k.

It was sheer luck but I was resigned to be only able to afford an apartment on my own but was delighted to be able to buy a 3 bed semi on my own.

That works assuming you are able to find someone to lend to you in a downturn. Not always the easiest.


Essentially if there is a downturn but you are not impacted then it artificially inflates your buying power by virtue of the fact that some of your "competitors" have had theirs reduced

duffman13

rireland wrote: »

Eh no, banks are there to protect the banks.

There's a reason banks have been told to offload underperforming loans.

I worked previously for a bank, no one, and I mean no one enjoyed working in the environment of restructures etc. Banks have to offload the loans because they are worthless for the most part and the central bank is there to regulate the banks and protect everyone

Its the on example of a state body doing a brilliant job. Things may relax in the next year or two, but not before then and any relaxation in rules I'd say will be counter balanced which may help someone like yourself

The central bank will look at increasing multiples of salary in the future based on % deposit. In other words a 30% deposit may get get you 4 or 4.5 times your salary. IMO this will replace th ed current exemptions system soon enough

Ush1

ELM327 wrote: »

That works assuming you are able to find someone to lend to you in a downturn. Not always the easiest.


Essentially if there is a downturn but you are not impacted then it artificially inflates your buying power by virtue of the fact that some of your "competitors" have had theirs reduced

True. It's the cost of living that gets tricky during a boom and not getting sucked into a trap of consumerism when there is money available. New cars, holidays, clothes, phones etc...

Most of my mates didn't save penny as they whittled it away on those things and then either are still here moaning they can't afford a house or went off to Australia or Canada.

Graham

Ush1 wrote: »

The crash worked for me. When I graduated from college it was peak boom and I was thinking I would get a nice apartment. I started saving, the crash happened, didn't lose my job so kept saving and bought a house in 2012 for 185k, it's now valued at 325k.

It was sheer luck but I was resigned to be only able to afford an apartment on my own but was delighted to be able to buy a 3 bed semi on my own.

It wasn't all luck.

You had saving and you bought at a time when there were still very large parts of the market hiding under duvets waiting for the storm to pass.

Mad_maxx

Graham wrote: »

It wasn't all luck.

You had saving and you bought at a time when there were still very large parts of the market hiding under duvets waiting for the storm to pass.

Plus he had to ignore the noise from sites like property pin telling him that the 185k house ( he bought) would eventually be worth under a hundred grand

Ush1

Mad_maxx wrote: »

Plus he had to ignore the noise from sites like property pin telling him that the 185k house ( he bought) would eventually be worth under a hundred grand

Very true, and the noise of buy a property at mad prices in 2008 before they go even higher!

whatever76

Ush1 wrote: »

The crash worked for me. When I graduated from college it was peak boom and I was thinking I would get a nice apartment. I started saving, the crash happened, didn't lose my job so kept saving and bought a house in 2012 for 185k, it's now valued at 325k.

It was sheer luck but I was resigned to be only able to afford an apartment on my own but was delighted to be able to buy a 3 bed semi on my own.

So jealous but congrats !! I am at a stage where i have a substantial deposit but with limited supply in where I want to but finding it difficult to find something I like and within my 300k budget - am hitting 40 so its a long term purchase so to speak and trying to keep mortgage under 200k if I can ( buying on my own ).

0gac3yjefb5sv7

Torn between buying an apartment which feels more secure IMO (not as in price secure) vs 2 bed house which may have some room to extend.

beauf

Buy where you want to live. , Has room with out extending for the next 10yrs. once you've tick those boxes, then look at which is the better investment.

No point living in a great investment if it causes problems for your daily living for a decade.