Property Market 2020

Cyrus

cnocbui wrote: »

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.

so most western countries have some central guidance?

neutral guy

PHG wrote: »

How do you own a property and renting too?

I am in a lot worse situation then you could imagine ! I bought land abroad and because I have a property and pay mortgage for it I cant apply for rent supplement or HAP ! I not just lost half price I am also loosing money for rent.I hope somebody will learn from my mistakes and will never believe bank experts or PA smiling faces ! The worse mistake in my life was believe them ! I was mad stupid and now I have work twice hard to recover !Because somebody made money telling me lies !

q85dw7osi4lebg

One agent I follow in the East Meath / South Louth Area has agreed 10 houses in the past two weeks according to their social media (addresses and pics listed), boom is back baby.

neutral guy

Julissa Bitter Jeep wrote: »

One agent I follow in the East Meath / South Louth Area has agreed 10 houses in the past two weeks according to their social media (addresses and pics listed), boom is back baby.

I heard many same stories and I see many signs Sale Agreed but this not gona catch me this time.I learned my leassons hardest possible way.If you dont have money to buy the house that mean there is no boom on market.Simple ! The next sign there is no boom I see from Euribor red zone and low interest from ECB.There is no sign of any boom at all ! The next sign the banks losing profits.There is many signs for those who see them !

neutral guy

Marius34 wrote: »

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.

One my friend bought house in 2004 for 220K
The minimum wage in 2004 was 6.50 per hour
The breakfast roll cost 2.30
The 47 inch TV cost 3500

Today his house cost 200K,he will mad lucky if he get that much.
The minimum wage are 10 per hour
The breakfast roll same shop 5 euros
The 47 inch TV cost 350 euros

I see inflation and deflation
When people spend more for breakfast roll they has less money for TV and house which prices are falling.
Now we can calculate value of the money my friends house was worth about 100K breakfast rolls
Now its worth less of half of it

To be honest when people talking about investment to property will save your money from inflation that make me laugh.

Also lets look to inflation durring the recessions.As we see by last recession and time after it the inflation was a lot smaller then trough previous recessions.With every new recession we have less inflation !

Now lets look to ECB activity and inflation in Europe trough last years,there is plenty signs of deflation what the top heads of ECB talking about.

neutral guy

As far I see from latest news I think government will expand support for first time buyers trying support jobs at building sites.The big attention will be put at afordable housing.Looks like many changes and corrections of prices on way.

The Belly

Cyrus wrote: »

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.)

Why should they not get a mortgage? The repayments are 30% of the net income?

Rents do yes but the only way they have been going is up for a very long time as with RE prices but the CB hasnt adopted policy to account for that.

They would need to fall by 40% and stay there to make it attractive to rent long term.

And why cant you base mortgage lending policy on net income? Isnt it the net income that pays for it?

Marius34

neutral guy wrote: »

One my friend bought house in 2004 for 220K
The minimum wage in 2004 was 6.50 per hour
The breakfast roll cost 2.30
The 47 inch TV cost 3500

Today his house cost 200K,he will mad lucky if he get that much.
The minimum wage are 10 per hour
The breakfast roll same shop 5 euros
The 47 inch TV cost 350 euros

I see inflation and deflation
When people spend more for breakfast roll they has less money for TV and house which prices are falling.
Now we can calculate value of the money my friends house was worth about 100K breakfast rolls
Now its worth less of half of it

To be honest when people talking about investment to property will save your money from inflation that make me laugh.

Also lets look to inflation durring the recessions.As we see by last recession and time after it the inflation was a lot smaller then trough previous recessions.With every new recession we have less inflation !

Now lets look to ECB activity and inflation in Europe trough last years,there is plenty signs of deflation what the top heads of ECB talking about.

I'm not going to give a lesson about what is Inflation and how it's calculate, nor I'm going to argue how some products price falling others going up.

It's enough to look at the nominal Salary increase to understand the big difference in this decade vs previous decades.
5% average annual nominal income increase used to be normal for decades, but not anymore, since 2008.

Graham

neutral guy wrote: »

One my friend bought house in 2004

It's not 2004 now.

PHG

neutral guy wrote: »

I am in a lot worse situation then you could imagine ! I bought land abroad and because I have a property and pay mortgage for it I cant apply for rent supplement or HAP ! I not just lost half price I am also loosing money for rent.I hope somebody will learn from my mistakes and will never believe bank experts or PA smiling faces ! The worse mistake in my life was believe them ! I was mad stupid and now I have work twice hard to recover !Because somebody made money telling me lies !

Sorry to hear that. I'm looking to maybe invest myself later in the year. I have family members who do this and one but of advice was, make sure you can drive by the property any time you want to make sure its OK. I had considered buying abroad (like in a tourist spot and rent it out) but as I would never see it, its a bad idea

neutral guy

PHG wrote: »

Sorry to hear that. I'm looking to maybe invest myself later in the year. I have family members who do this and one but of advice was, make sure you can drive by the property any time you want to make sure its OK. I had considered buying abroad (like in a tourist spot and rent it out) but as I would never see it, its a bad idea

I bought in my country so the investment is safe enough and might be I will get my money back in another 10 years.I have option build house there or buy roof and wals here and do the rest my self (I am highly skilled carpenter ).Will continue saving money and waiting for good deal.Not gonna listen anybody anymore about best time to buy and will save money untill I will see that is time to buy.Pretty sure there wil be plenty options in next couple years.

Villa05

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.

The rules were imposed to protect the state/eu from the banks

GreeBo wrote:

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.

The best advise I got when I was buying was to look at houses that were built during a recession as the buyers were scarce the quality had to be good to achieve a sale
The opposite is the case during a boom. Throw up anything and the buyer will come to you

The Belly wrote:

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

This is why an affordable homes program of scale in high demand areas is needed. It has the potential to pay for itself and be a massive stimulus to the economy at the same time. Post pandemic is the perfect time to implement it.

The central banks role is to protect the financial system. They can't be held responsible for something that is not in their remit when they were found to be big part of the last crash

wassie

cnocbui wrote: »

Which countries have their Central Bank dictating their borrowing limits?

Australian banks follow lending guidance issued by their Prudential Regulator which was significantly tightened after a decade of lax lending practices came under scrutiny in during a recent Royal Commission (similar to our Tribunal of Inquiry) in to the banking sector.

As well as higher capital requirements, in response the regulator required lenders to assess loan serviceability using the higher of either
(i) an interest rate floor of at least 7 per cent, or
(ii) a 2 per cent buffer over the loan’s interest rate.

This had an immediate negative effect on mortgage approvals, and in turn prices, particularly in the buy-to-let market (which is much more active than here).

The regulator after a couple of years, combined with a rapidly cooling housing market,allowed lenders to set their own minimum interest rate floor and make their calculations using a 2.5% buffer.

The Belly

Villa05 wrote: »

The rules were imposed to protect the state/eu from the banks



The best advise I got when I was buying was to look at houses that were built during a recession as the buyers were scarce the quality had to be good to achieve a sale
The opposite is the case during a boom. Throw up anything and the buyer will come to you




This is why an affordable homes program of scale in high demand areas is needed. It has the potential to pay for itself and be a massive stimulus to the economy at the same time. Post pandemic is the perfect time to implement it.

The central banks role is to protect the financial system. They can't be held responsible for something that is not in their remit when they were found to be big part of the last crash

Mission statement.

The Central Bank plays an important role in Irish society and we recognise the need for us to deliver on our mandate in the most effective way possible. The role and responsibilities of the Central Bank have increased over the years since our establishment in 1943. Serving the public interest has always been at the core of our work and is reflected in our Mission Statement. In addition, our Mission Statement recognises the important role that the Central Bank plays in safeguarding stability and in ensuring that the financial system is working in the interests of consumers and the wider economy

I dont think their current policy is serving the public interest with sky rocketing rents and real estate prices.

Graham

The Belly wrote: »

I dont think their current policy is serving the public interest with sky rocketing rents and real estate prices.

Yet the very thing you're arguing for would see house prices sky rocket which in turn would drive up rents.

I understand it's hard for some to see the consequences of the "if only I could borrow more" approach outside of the thought that it might mean they can buy at todays prices. It's hard to grasp todays prices wouldn't be around if lending restrictions were dumped.

wassie

neutral guy wrote: »

Also lets look to inflation durring the recessions.As we see by last recession and time after it the inflation was a lot smaller then trough previous recessions.With every new recession we have less inflation !

Now lets look to ECB activity and inflation in Europe trough last years,there is plenty signs of deflation what the top heads of ECB talking about.

But I would say that Ireland economic fortunes are not tied to performance of the mainland, but more so US (capital) & UK (trade).

wassie

The Belly wrote: »

Mission statement.

The Central Bank plays an important role in Irish society and we recognise the need for us to deliver on our mandate in the most effective way possible. The role and responsibilities of the Central Bank have increased over the years since our establishment in 1943. Serving the public interest has always been at the core of our work and is reflected in our Mission Statement*. In addition, our Mission Statement recognises the important role that the Central Bank plays in safeguarding stability and in ensuring that the financial system is working in the interests of consumers and the wider economy

I dont think their current policy is serving the public interest with sky rocketing rents and real estate prices.

* Except when we were on a long lunch during the naughties......

cnocbui

Graham wrote: »

Yet the very thing you're arguing for would see house prices sky rocket which in turn would drive up rents.

I understand it's hard for some to see the consequences of the "if only I could borrow more" approach outside of the thought that it might mean they can buy at todays prices. It's hard to grasp todays prices wouldn't be around if lending restrictions were dumped.

Do you think the borrowing cap has no impact on the motivation of developers to create supply?

Graham

cnocbui wrote: »

Do you think the borrowing cap has no impact on the motivation of developers to create supply?

Asked and answered previously.

Do you think €600k 3 bed semis and 8 x income mortgages is where we really want the country to go?

You genuinely think the solution is uncapped lending. Trusting that the population will never borrow more than they can reasonably afford. Trusting that banks won't lend recklessly.

1sttimebuyer20

cnocbui wrote: »

Sounds like you want something, but are not prepared to pay for it. Good luck.

If you read back you will find I stated I went for a new build. Very happy to pay for it

Bass Reeves

neutral guy wrote: »

I am in a lot worse situation then you could imagine ! I bought land abroad and because I have a property and pay mortgage for it I cant apply for rent supplement or HAP ! I not just lost half price I am also loosing money for rent.I hope somebody will learn from my mistakes and will never believe bank experts or PA smiling faces ! The worse mistake in my life was believe them ! I was mad stupid and now I have work twice hard to recover !Because somebody made money telling me lies !

One of the best bits of advice I every go was if you are dealing with people in business have a look around the table for the mug if you cannot see one look in the mirror to make sure its not you. Never believe anyone selling ou anything. I could never understand the advice in the noughties to people to buy abroad. As one lad said which is the better ROI, 2-4% in longterm steady European demoracies, 5-10% in Eastern Europe or 10%+ in Russia.

neutral guy wrote: »

I heard many same stories and I see many signs Sale Agreed but this not gona catch me this time.I learned my leassons hardest possible way.If you dont have money to buy the house that mean there is no boom on market.Simple ! The next sign there is no boom I see from Euribor red zone and low interest from ECB.There is no sign of any boom at all ! The next sign the banks losing profits.There is many signs for those who see them !

I just cannot see a price collapse above 10% too many people looking for houses and nobody building. If we do see the apocalypse now that some are predicting there will be a lot of lads on here that think a price collapse is a good thing with sad faces.

neutral guy wrote: »

One my friend bought house in 2004 for 220K
The minimum wage in 2004 was 6.50 per hour
The breakfast roll cost 2.30
The 47 inch TV cost 3500

Today his house cost 200K,he will mad lucky if he get that much.
The minimum wage are 10 per hour
The breakfast roll same shop 5 euros
The 47 inch TV cost 350 euros

I see inflation and deflation
When people spend more for breakfast roll they has less money for TV and house which prices are falling.
Now we can calculate value of the money my friends house was worth about 100K breakfast rolls
Now its worth less of half of it

To be honest when people talking about investment to property will save your money from inflation that make me laugh.

Also lets look to inflation durring the recessions.As we see by last recession and time after it the inflation was a lot smaller then trough previous recessions.With every new recession we have less inflation !

Now lets look to ECB activity and inflation in Europe trough last years,there is plenty signs of deflation what the top heads of ECB talking about.

If your friend paid 220K and its only worth 200K now he either bought in a tax incentivised property ( and some of them are still only worth 50% of there original prices) or bought a house in bally go backwards. The noughties boom had not even started then. I had my house up for sale in summer 2003 and prices were back from 2002 I stayed put but prices in Ireland were only recovering in early 2004

neutral guy

The difference at the moment is that people does not pay own money for the property
They pay bank money
For that reason they does not feel taste of own sweat and blood
Lets wait and speak about prices when banks will stop give money to those people
This gonna happen soon enough I think.
Well,some prices on some locations will stay unaffected because some rich people will not hurry sell them houses
But big changes will come to another levels of property
So before talking about demand and supply lets start talk about were will be supply and were will be demand.
Property is the same as car industry,some people buy Dacia some Bentley
So about which markets of property we are talking about ? Were prices gonna fall "just" 10 per cent or were 50 ?

Assetbacked

neutral guy wrote: »

Well,some prices on some locations will stay unaffected because some rich people will not hurry sell them houses

Regarding this point, I have older parents, asset rich, cash poor as they say. On paper they would have be rich. And, of course this is just anecdotal, they are happy to wait 2/3 years to sell. Similar to a friend and his parents with their house.

Now, in a functioning market, it is hard to see how property prices remain so high and how much is required to borrow in order to buy them.

But one thing to note is that the system can be manipulated to keep prices up or at least to find a bit of a balance between ensuring security for those that own their house and those that want to be able to afford their own. I think our elected leaders being home owners are testamant to this. Therefore, the prices are to an extent allowed to be kept at a certain level some would call high. Until more fundamental shifts in our economic system happen, it will stay this way.

In America there is a saying never bet against the Fed and there is a reason for it.

Bass Reeves

cnocbui wrote: »

Do you think the borrowing cap has no impact on the motivation of developers to create supply?

The biggest reason for the slowness in house building for the last 2-3 years was the demand for comercial building was driving building costs up. Builders tried to bluff the government into giving them tax breaks and trying to get an increase borrowing capa.

Government and Central bank held there nerve and builders started to build as commercial building started to slow in Dublin late last year.

Banks are allowed to exceed caps but only in a limited % of loans every year. Rental increases in Dublin has as much to do with increased demand by inward migration as with limited supply. The increase in house prices did not encourage investors to buy in Dublin or any other city over the last two years.

In Dublin a 400K house making 25K in rent is yielding 6.2% return. That a risky investment when house prices had maximised. In Limerick, Galway or cork a 250K house making 18K in rent is yielding 7.2. A lot of investors will not invest unless at or near 10% at least

Bass Reeves

neutral guy wrote: »

The difference at the moment is that people does not pay own money for the property
They pay bank money
For that reason they does not feel taste of own sweat and blood
Lets wait and speak about prices when banks will stop give money to those people
This gonna happen soon enough I think.
Well,some prices on some locations will stay unaffected because some rich people will not hurry sell them houses
But big changes will come to another levels of property
So before talking about demand and supply lets start talk about were will be supply and were will be demand.
Property is the same as car industry,some people buy Dacia some Bentley
So about which markets of property we are talking about ? Were prices gonna fall "just" 10 per cent or were 50 ?

For the last 50 years+ people have borrowed for houses.30-50 years ago lending models were 2.5 times first wage and once second wage. Women earned less than men so borrowing was about 3 time annual wahe. But interest rates were 6-10% I even say them go above 12. I had a friend went to a broker in the early 1990's who when rates were hitting 16%( punt devaluation) talked him into a 10 year fixed at 9.5%, I borrowed at the same time and average less than 5 over those 10 years.

However now people are paying sub 3% on 5-10 year fixed terms. Just to put it in context a 250K mortgage costs 1150/month to repay, a 400K mortgage is about 1840. Two people on a modest wage of 500/week will have over 1880/month income each..

neutral guy

I think government will enough build couple additional railways and motorways and many things in Dublin will back to normal.

Empty_Space

Things will start to progress soon.
We will see a flood of investment property hit the market, followed by big drops and a media scare mongering campaign about how prices could plummet. Which they will of course.

It's just very difficult to see how long this will take to unfold.
My best bet is that it will be quicker then most can fathon. Everything is moving in fast forward these days due to the extreme condition of economies.

Assetbacked

Empty_Space wrote: »

Things will start to progress soon.
We will see a flood of investment property hit the market, followed by big drops and a media scare mongering campaign about how prices could plummet. Which they will of course.

It's just very difficult to see how long this will take to unfold.
My best bet is that it will be quicker then most can fathon. Everything is moving in fast forward these days due to the extreme condition of economies.

Really bad news about jobs in recent weeks and it's going to get worse as people get out of lockdown. Just today it was reported that House of Ireland is now gone after 45 years and Ryan Air staff are taking 10% temporary pay cut. It's never temporary.

Aircraft leasing is huge in Ireland with 100bn of assets and it's a massive earner for those that work in the industry but it is going to be obliterated. That means the effects of the pandemic aren't just those at the coalface of tourism and retail but the highly paid financial services employees. Across big law firms, bonuses and partners' equity has taken a hit. The equity would've been factored in to mortgage applications, maybe not the bonuses for normal staff.

In Ireland, we were told that corporate tax revenue held up remarkably well, this is what is keeping our economy going. These corporate tax revenues are inflated by MNC activity. Google, Facebook, Amazon and Apple in the US share prices and valuations are in a frightening bubble. They defy any fundamental assessment of what constitutes a good investment and just keep climbing. The Fed is propping up the US stock market and is even buying the debt of these companies. They don't need to collapse but just need to take a fair enough whack for Ireland to be mightily exposed.

The hysteria over the virus itself is completely disproportionate to what our actual data is showing and it is coming at the expense of the economy which is really starting to strain. It pisses me off to still see lies and manipulated data in the media being used to create fear over the pandemic while the economic arguments are not being aired. I think it is time to start trying to think about contingency plans for the next few years for those that are reliant on a wage for their living.

Hubertj

Empty_Space wrote: »

Things will start to progress soon.
We will see a flood of investment property hit the market, followed by big drops and a media scare mongering campaign about how prices could plummet. Which they will of course.

It's just very difficult to see how long this will take to unfold.
My best bet is that it will be quicker then most can fathon. Everything is moving in fast forward these days due to the extreme condition of economies.

Why will investment properties flood the market? People are Saying mortgage payments can be 50% less than rents? What am I missing?

neutral guy

Nice one

“The quality of life that I have here is higher than I would have in Ireland. My rent here is so low its a joke. I’m about to move into a 90 square metre [just under 1,000sq ft] apartment for €950 per month with my boyfriend and dogs. It’s three times what I’m paying now and three times less than I’d pay back home.”

https://www.irishtimes.com/business/work/my-rent-here-is-so-low-it-s-a-joke-1.4298379

That how everything is starting guys !
Media preparing you for changes in Ireland

https://www.independent.ie/business/personal-finance/mortgage-lending-hit-lowest-level-on-record-in-may-amid-covid-19-lockdown-39357189.html

Properties still flying above asking ? No problem this will be "fixed" soon !