Property Market 2020

Graham

All I'm saying is allowing people to borrow more is not the solution. It would make a bad situation worse.

We essentially do have a state backed lending scheme operating at the moment. The rebuilding Ireland home loan.

JimmyVik

errlloyd wrote: »

LTV restrictions and deposit requirements effectively prevent any individual or couple with a family income of less than around 80k per year from ever buying near Dublin. Forcing them to continue renting.

And they could all buy near Dublin tomorrow what do you think will happen to house prices.

cnocbui

Anyone else thing central bank rules might also be responsible for low supply by acting as a disincentive to development?

I'm not sure they are a good idea anymore. They were supposed to be a temporary measure and people seem to think they should be a permanent fixture like the temporary USC.

Graham

I think lending limits should be a permanent measure for your average family home.

We've already witnessed the fallout for the alternative.

JimmyVik

cnocbui wrote: »

Anyone else thing central bank rules might also be responsible for low supply by acting as a disincentive to development?

I'm not sure they are a good idea anymore. They were supposed to be a temporary measure and people seem to think they should be a permanent fixture like the temporary USC.

That, together with councils both buying up and getting a large share of new builds. Not to mention REITs buying whole blocks and councils then leasing them for top dollar and the REITs getting sweetheart tax treatment. Tax payer is rode silly from all angles.

Cyrus

Graham wrote: »

I think lending limits should be a permanent measure for your average family home.

We've already witnessed the fallout for the alternative.

absolutely

they had already put the brakes on dublin prices, we would have gone far past where we were without them.

lastusername

AlmightyCushion wrote: »

People still need somewhere to live but they can cut back and make compromises on the places they live. Move to less desirable areas or smaller, less desirable properties. They move home. They share instead of live by themselves.

What about those who haven't been affected by the downturn and who may even be doing better financially now?

Villa05

cnocbui wrote:

Anyone else thing central bank rules might also be responsible for low supply by acting as a disincentive to development?

Fianna fail and to a lesser extent. Fianna gael.

Michael Martin had a go at the central bank about them just before the election. They also are going around with the motto of Ff are the party of home ownership.

Fg had several attempts at work arounds on the rules with limited success

Graham

I'm pretty sure runaway lending would incentivise development. It certainly worked in the years immediately leading up to the global financial crash.

It would also leave us exposed the very same risks that caught us out last time.

I'd rather see supply encouraged some other way.

Villa05

cnocbui wrote:

I'm not sure they are a good idea anymore. They were supposed to be a temporary measure and people seem to think they should be a permanent fixture like the temporary USC.

I can absolutely say that if theses rules were not in place over the last 4 years, we would be facing a 2008 crisis now.

Nobody said they would be temporary, rather they would be reviewed with the possibility of tightening or loosening

I belive they have only been tightened since inception with a reduction in the exemptions

Cyrus

Villa05 wrote: »

Fianna fail and to a lesser extent. Fianna gael.

Michael Martin had a go at the central bank about them just before the election. They also are going around with the motto of Ff are the party of home ownership.

Fg had several attempts at work arounds on the rules with limited success

to be fair i think most politicians even those from the left side of the fence have had a go at them at certain stages as there is political capital in it from those who only think of their own set of circumstances.

Graham

Villa05 wrote: »

I can absolutely say that if theses rules were not in place over the last 4 years, we would be facing a 2008 crisis now.

+1

We'd have triple the number of houses built per year. The average price for a 3-bed semi would be €600k. Construction crews would be arriving on site in 911s and we'd have 80,000 speculative builds waiting to hit the market.

We'd also have 50,000 new homeowners wondering how they were going to pay back the 8 x income 100% mortgages.

AlmightyCushion

lastusername wrote: »

What about those who haven't been affected by the downturn and who may even be doing better financially now?

Those people might not cut back on housing expenses just like they might not cut back on non-essential spending.

Assetbacked

JimmyVik wrote: »

That, together with councils both buying up and getting a large share of new builds. Not to mention REITs buying whole blocks and councils then leasing them for top dollar and the REITs getting sweetheart tax treatment. Tax payer is rode silly from all angles.

Is it any wonder when we operate as a tax haven that those charged with making policy and legislation are not up to the same standard as those in the private sector? Public services suffer greatly when taxes are not paid and the situation with the REIT regime and before that the s110 vehicles came about from industry running rings around the system. Who pays? Well, the people of course, who suffer as a result of depleted public services, inadequate legal and policy protections. It also further exacerbates the inequality which pervades in western societies.

And it is not a case of all or nothing, I don't think anyone reasonable doubts that REITs have their place. All people want is an even playing field with people paying their fair share and earning in accordance with the work they put in. With the explosion of asset prices the past 30 years, it is still perhaps a new phenomenon and one can be forgiven for thinking the only way is up because, despite a few bumps in the road, asset prices do continue to rise over time. In the UK and US, two stalwarts of western economies, we have seen Brexit and Trump populist votes in recent years. In Ireland, we have rejected European treaties in the past and now we have SF becoming mainstream, on the brink of getting into power in the Republic. I think unless something big changes, these types of populist votes will get more extreme.

Long story short, I think there are a few basic needs that the West is struggling to ensure are universally available which they need to put in place; shelter, financial security and health.

The Belly

Graham wrote: »

+1

We'd have triple the number of houses built per year. The average price for a 3-bed semi would be €600k. Construction crews would be arriving on site in 911s and we'd have 80,000 speculative builds waiting to hit the market.

Not if the new developments were targeted in the right places.

We had property built where we didnt need it before.

Now its the wrong way around we dont have enough new property being built as the cap on lending is restricting who can qualify.

So rent go sky high investors flood in compounding the problem.

Councils with the cash buy up houses and apartments at going market rates due to a lack of rent affordability again driving up prices.

You have social welfare recipients living in 450k houses. A working couple unable to save as cost of renting is too high.

People have to rely on HAP to rent when the average HAP payment would pay a mortgage for a couple.

All of which drives up RE prices rents and creates a generation of renters on state reliance great for investors and REITS but bad for society overall.

cnocbui

Villa05 wrote: »

I can absolutely say that if theses rules were not in place over the last 4 years, we would be facing a 2008 crisis now.

Nobody said they would be temporary, rather they would be reviewed with the possibility of tightening or loosening

I belive they have only been tightened since inception with a reduction in the exemptions

Well, it actually suits me to have a strangled supply situation as I seem to be about the only person on here who is interested in selling, rather than buying.

I don't agree with it; nanny-stateism protecting people from themselves. Personally I don't need the state deciding what's in my best interests.

I wonder why Ireland has so many diesel powered cars? Oh that's right, the state knows best what sort of cars people should be driving.

Graham

The Belly wrote: »

Not if the new developments were targeted in the right places.

We had property built where we didnt need it before.

Now its the wrong way around we dont have enough new property being built as the cap on lending is restricting who can qualify.

So rent go sky high investors flood in compounding the problem.

Councils with the cash buy up houses and apartments at going market rates due to a lack of rent affordability again driving up prices.

You have social welfare recipients living in 450k houses. A working couple unable to save as cost of renting is too high.

People have to rely on HAP to rent when the average HAP payment would pay a mortgage for a couple.

All of which drives up RE prices rents and creates a generation of renters on state reliance great for investors and REITS but bad for society overall.

so the solution to all of this is to allow people to borrow more money irrespective of their income?

Graham

cnocbui wrote: »

I don't agree with it; nanny-stateism protecting people from themselves. Personally I don't need the state deciding what's in my best interests.

Think of it as the state protecting you from the actions of others

Marius34

Graham wrote: »

+1

We'd have triple the number of houses built per year. The average price for a 3-bed semi would be €600k. Construction crews would be arriving on site in 911s and we'd have 80,000 speculative builds waiting to hit the market.

We'd also have 50,000 new homeowners wondering how they were going to pay back the 8 x income 100% mortgages.

I totally agree with Central Bank Rules, which is well in place for stability.
But I think we would not reach the madness of 2008. One of the big reason for this is Inflation. Back than many saw long term significant currency devaluation, which is not really a case for the past decade.
But it is right to say that Central Bank Rules impacts -> Price. Price impact -> Supply.

cnocbui

Graham wrote: »

so the solution to all of this is to allow people to borrow more money irrespective of their income?

I'm pretty sure that in most other countries people are allowed to borrow as much as they and their bank are happy they can afford. Seems to work.

Cyrus

cnocbui wrote: »

I'm pretty sure that in most other countries people are allowed to borrow as much as they and their bank are happy they can afford. Seems to work.

lots of countries have guidance from their central bank or equivalent.

cnocbui

Graham wrote: »

Think of it as the state protecting you from the actions of others

No. Evidence almost everyone driving carcinogen spewing diesels. The state inflicted that on me deliberately, it didn't f*****g protect me!

cnocbui

Cyrus wrote: »

lots of countries have guidance from their central bank or equivalent.

Which countries have their Central Bank dictating their borrowing limits?

GreeBo

Villa05 wrote: »

I think that scenario is far more likely to happen at the top of the market than the bottom. Affordability issues will force you to compromise on too many aspects of the property that are important to you as well as location

Not really, a bad house is a bad house.
If you buy at the top then your bad house drops by more than the others.
If you buy at the bottom then your bad house doesnt appreciate as much as the other houses.

A bad house is a bad house.

Cyrus

cnocbui wrote: »

Which countries have their Central Bank dictating their borrowing limits?

in norway its between the govt and the FSA
https://www.reuters.com/article/norway-finmin-housing/update-1-norway-should-extend-mortgage-restrictions-but-remove-oslo-measure-fsa-idUSL8N1QI53Z

Sweden

https://www.spglobal.com/marketintelligence/en/news-insights/trending/h_duzxmkgvbx3hpxtslktq2

UK

https://www.ftadviser.com/mortgages/2020/05/29/govt-urged-to-reconsider-post-2008-mortgage-restrictions/

they were literally the first few i googled, its relatively common as far as i know?

The Belly

Graham wrote: »

so the solution to all of this is to allow people to borrow more money irrespective of their income?

I think the rules should not be blanket rules across the board.

Example

Couple on Minimum wages of 21k each no children

Cost of apartment 250k
Deposit of 10% 25k
Repayment around 900 over 30 years.
Couple on minimum wages job net income 3194
Repayments less then 30% of net income
Net income after rent 2294


Rent for apartment 1600
Couple on minimum wages job net income 3194
Rent as a percentage of net income over 50%
Net income after rent 1594

Current rules 3.5 times salary Gross salary 42k max mortgage 147k

Should they be able to buy the apartment or should they be capped and forced to stay renting?

Cyrus

The Belly wrote: »

I think the rules should not be blanket rules across the board.

Example

Couple on Minimum wages of 21k each no children

Cost of apartment 250k
Deposit of 10% 25k
Repayment around 900 over 30 years.
Couple on minimum wages job net income 3194
Repayments less then 30% of net income
Net income after rent 2294


Rent for apartment 1600
Couple on minimum wages job net income 3194
Rent as a percentage of net income over 50%
Net income after rent 1594

Current rules 3.5 times salary Gross salary 42k max mortgage 147k

Should they be able to buy the apartment or should they be capped and forced to stay renting?

there arent blanket rules, thats why there are exemptions, however that couple are unlikely to get a mortgage regardless. rents will go up and down, you cant base your mortgage lending policy on something like that.

its not perfect but its better than the alternative.

hometruths

cnocbui wrote: »

I'm pretty sure that in most other countries people are allowed to borrow as much as they and their bank are happy they can afford. Seems to work.

And in most other countries if it turns out these people cannot afford as much as they or the bank previously thought, the bank can repossess the house.

Seems to work.

cnocbui

Cyrus wrote: »

in norway its between the govt and the FSA
https://www.reuters.com/article/norway-finmin-housing/update-1-norway-should-extend-mortgage-restrictions-but-remove-oslo-measure-fsa-idUSL8N1QI53Z

Sweden

https://www.spglobal.com/marketintelligence/en/news-insights/trending/h_duzxmkgvbx3hpxtslktq2

UK

https://www.ftadviser.com/mortgages/2020/05/29/govt-urged-to-reconsider-post-2008-mortgage-restrictions/

they were literally the first few i googled, its relatively common as far as i know?

That Norwegian link was talking about winding back their measures.

The Swedish link suggests their rules are about rates of amortization, not borrowing limits.

The UK; Not hard to see Ireland did the usual and just copied the UK. The link is all about calls to wind it back.

Canada doesn't seem to limit borrowed amount, it's more a regulation of mortgage insurance.

Australia; It's up to the lender.

Singapore; Just seems to be 90% or less of the price, otherwise a free for all.

Graham

cnocbui wrote: »

I'm pretty sure that in most other countries people are allowed to borrow as much as they and their bank are happy they can afford. Seems to work.

I guess it must (apart from the whole global financial collapse hiccup).