Irish Property Market 2020 Part 2

TheSheriff

schmittel wrote: »

Personally I'd never live in a housing estate of any vintage but it strikes me that the bulk of FTBers are driven to spend the max they can afford based on the amount of deposit saved + lending limits etc.

I could easily envisage a scenario in which most FTBers feel like it is an unwise decision to buy a 250k second hand house when for the same outlay they could buy a 320k new build.

New builds come with several disadvantages, and as someone who is actively looking we were as wise as every other FTB. Every new built we went too, first question was "Wheres the social housing going".

awec

schmittel wrote: »

Surely if you're a first time buyer who can avail of 30k HTB and not have to fund whatever portion of equity the govt are buying on a new build, you'd need your head examined to buy a second hand house?!

Most FTBs don't really get to make this decision, at least not if they are shopping for houses that are comparable between new / used.

Imagine they give up the 30k. And let's imagine the 30k inflates the price of the house, so a similar second hand house is 30k cheaper than the new house.

So for example:

new build @ 500k - deposit required = 50k, 30k htb 20k savings
second hand @ 470k - deposit required = 47k, 47k savings

Over twice the savings needed. SO if it took them 2 years to save 20k, it'll take at least that again to save the next bit.

Even if the second hand was say 60k cheaper, you are still looking at needing 44k deposit saved, again still twice the amount.

It's not a decision most can really make. But I would say that finance is only one aspect of this, obviously many FTBs do buy second hand because of the other intangibles (e.g. location preferences or whatever).

Rattlehead_ie

It also depends on whats out there to buy new and mortgage running out.
Im in a situation of where Im looking at both as a FTB, but everything in the areas Im looking at new is gone and waiting for "next phase" with no timeline. At least the HTB was extended.

hometruths

TheSheriff wrote: »

New builds come with several disadvantages, and as someone who is actively looking we were as wise as every other FTB. Every new built we went too, first question was "Wheres the social housing going".

Hadn't really considered that, but fair point, I can see how that would be a factor.

hometruths

awec wrote: »

Most FTBs don't really get to make this decision, at least not if they are shopping for houses that are comparable between new / used.

Imagine they give up the 30k. And let's imagine the 30k inflates the price of the house, so a similar second hand house is 30k cheaper than the new house.

So for example:

new build @ 500k - deposit required = 50k, 30k htb 20k savings
second hand @ 470k - deposit required = 47k, 47k savings

Over twice the savings needed. SO if it took them 2 years to save 20k, it'll take at least that again to save the next bit.

Even if the second hand was say 60k cheaper, you are still looking at needing 44k deposit saved, again still twice the amount.

It's not a decision most can really make. But I would say that finance is only one aspect of this, obviously many FTBs do buy second hand because of the other intangibles (e.g. location preferences or whatever).

Yes, I think we are in agreement - they're being funnelled into new builds whether they like it or not.

The point I made was in reference to the possibility that there might be some shared equity scheme on top of HTB.

Although a new build in a housing estate would be the last thing I would want if I was an FTB being offered HTP and shared equity, even I would buy a new build.

If it is anything like the UK scheme it would be too good to turn down:

With a Help to Buy: Equity Loan the government lends you up to 20% (40% if you’re in London) of the cost of your newly built home.

You pay a deposit of 5% or more and arrange a mortgage of 25% or more to make up the rest.

Particularly, if like me you're cynical enough to believe you'd never actually have to pay it off, and your fellow taxpayers will foot the bill for you!

enricoh

calfmuscle wrote: »

I'm a first time buyer trying to buy solo, the market it flying up around here. Iv rang asking about 3 houses priced 215 to 245 all went by 15k to 40k over the asking price. Its a nightmare and unless there is a crash I'll never get a home.

Chances are you were outbid by taxpayers money for social housing on some of them. If u can't beat them, join them!

KnowingWind

Just remember guys.

Just about when all the sheep are saying property will go up forever and never drop...is when it drops.

The drops are quick, all signs are in.

mousblaster17

HotDudeLife wrote: »

Patience my friend, play the long game. This house of cards won't be standing much longer, huge crash coming in 2021-2022.

lol!

Waiting for house prices to drop be like...


if you believe prices will drop, you'll never buy.

Bubbaclaus

KnowingWind wrote: »

Just remember guys.

Just about when all the sheep are saying property will go up forever and never drop...is when it drops.

The drops are quick, all signs are in.

If all the signs are in, then I'm sure you would like to share them all with the class.

Graham

KnowingWind wrote: »

when all the sheep are saying property will go up forever and never drop

I must have missed that post.

fliball123

HotDudeLife wrote: »

Patience my friend, play the long game. This house of cards won't be standing much longer, huge crash coming in 2021-2022.

yawn people have been saying that since Feb in a few months its going to hit yadda yadda..play the long game if you want but the budget will keep things ticking along no sign of price drops

KennisWhale

irishtimes.com/business/economy/budget-2021-main-points-up-to-5-000-a-week-for-covid-hit-firms-hospitality-vat-rate-cut-1.4379526?mode=amp

Spending of 2.4 billion in 2021 will support an additional 15,000 Housing Assistance Payment tenancies and 800 Rental Accommodation Scheme tenancies.

This signals to me an artificially inflated rental market when the State is the largest tenant and directly competes on such a huge scale with individuals.

Are those numbers correct? An "additional" 15,800 tenancies to how many and 2.4bn being funnelled into the pockets of private landlords from the State!? Mind-boggling and catastrophically high figures.

calfmuscle

enricoh wrote: »

Chances are you were outbid by taxpayers money for social housing on some of them. If u can't beat them, join them!

I'll be living in a cemetery sooner.

Timing belt

fliball123 wrote: »

yawn people have been saying that since Feb in a few months its going to hit yadda yadda..play the long game if you want but the budget will keep things ticking along no sign of price drops

The first time we will get a chance to see what is ahead in the property market is when the banks release there Q3 earnings at the end of the month. That will tell the level of arrears and the impact it will have on the banks future lending.

Edit: Extract from S&P report on banks Sept 2020

"Provisioning charges continue to vary widely from bank to bank. Through June, asset quality
metrics revealed only modest evidence of deterioration, as we gather that provisioning is guided
mostly by management teams’ expectations of future loan performance. Irish, U.K., and Dutch
banks, for example, seemed to have front-loaded much more provisions than others. Those that
did not front-load as much will likely continue recording sizable provisions through into 2021."

MacronvFrugals

KennisWhale wrote: »

irishtimes.com/business/economy/budget-2021-main-points-up-to-5-000-a-week-for-covid-hit-firms-hospitality-vat-rate-cut-1.4379526?mode=amp



This signals to me an artificially inflated rental market when the State is the largest tenant and directly competes on such a huge scale with individuals.

Are those numbers correct? An "additional" 15,800 tenancies to how many and 2.4bn being funnelled into the pockets of private landlords from the State!? Mind-boggling and catastrophically high figures.

Do you know the total number of hap tenancies?

Springy Turf

Timing belt wrote: »

The first time we will get a chance to see what is ahead in the property market is when the banks release there Q3 earnings at the end of the month. That will tell the level of arrears and the impact it will have on the banks future lending.

We just got a new lender in the country with lower interest rates. Banks have to pay to keep money on deposit. For sure the banks might lower their risk profile, but already with our mortgage lending rules there is a regulatory limit on mortgage sizes against income.

Timing belt

Springy Turf wrote: »

We just got a new lender in the country with lower interest rates. Banks have to pay to keep money on deposit. For sure the banks might lower their risk profile, but already with our mortgage lending rules there is a regulatory limit on mortgage sizes against income.

I am not talking about the banks lending more I'm talking about them lending less if arrears eat into there capital and limit there ability to lend.

KennisWhale

MacronvFrugals wrote: »

Do you know the total number of hap tenancies?

irishtimes.com/news/environment/housing-assistance-scheme-will-breach-1bn-mark-next-month-1.4131081

This was an article from the start of the year. I'm not sure if it is being deliberately obtuse or if it is the IT's particularly awful standard of journalism these days but I cannot garner the total number of Hap tenancies from the article despite my perception indicating that it can be extrapolated from the article. 52,000, is that what it provides?

silver2020

KnowingWind wrote: »

Just remember guys.

Just about when all the sheep are saying property will go up forever and never drop...is when it drops.

The drops are quick, all signs are in.

been hearing that so often and in reality it has only happened once in the past 30 years and that because the world had gone crazy on a property and lending ponzi scheme and no-one shouted stop til the guy at the bottom said he wanted his money back.

Cheap and easy credit with few question asked - that was the mode of operation almost WORLDWIDE. All asset classes collapsed almost overnight.

That is not happening these days. Some prices are frothy, some are great value (I bought a holiday home investment recently that was 75% below the price some fool bought in 2006 - I'll get 20% return by letting it on airbnb and be able to use it frequently)

Decent sized 3 beds are becoming available in Dublin for 300k - that's affordable for many. A 30 year 275k mortgage will be €1100 a month. You can fix it for 10 years for under €1150, or be sensible and go for 25 years @ €1275 a month

There is no deep recession even on the horizon

silver2020

Timing belt wrote: »

The first time we will get a chance to see what is ahead in the property market is when the banks release there Q3 earnings at the end of the month. That will tell the level of arrears and the impact it will have on the banks future lending.

Some of the glass half empty crowd will be very disappointed. No discernible increase in arrears
https://www.lawsociety.ie/gazette/top-stories/home-loan-arrears-decreased-after-covid-payment-breaks/

KennisWhale

silver2020 wrote: »

been hearing that so often and in reality it has only happened once in the past 30 years and that because the world had gone crazy on a property and lending ponzi scheme and no-one shouted stop til the guy at the bottom said he wanted his money back.

Cheap and easy credit with few question asked - that was the mode of operation almost WORLDWIDE. All asset classes collapsed almost overnight.

That is not happening these days . Some prices are frothy, some are great value (I bought a holiday home investment recently that was 75% below the price some fool bought in 2006 - I'll get 20% return by letting it on airbnb and be able to use it frequently)

Decent sized 3 beds are becoming available in Dublin for 300k - that's affordable for many. A 30 year 275k mortgage will be €1100 a month. You can fix it for 10 years for under €1150, or be sensible and go for 25 years @ €1275 a month

There is no deep recession even on the horizon

Unfortunately, the above is not true with respect to the corporate bond market and QE programmes of central banks combined with the zero interest rate environment meaning there is plenty of cheap and easy credit available which has blown up asset prices and increased debt significantly since 2008. Asset valuations across classes have climbed significantly in the past 10 years, we are overdue some form of correction but to gauge those most exposed, look at those highly leveraged and those dependent indirectly on those entities.

Timing belt

silver2020 wrote: »

been hearing that so often and in reality it has only happened once in the past 30 years and that because the world had gone crazy on a property and lending ponzi scheme and no-one shouted stop til the guy at the bottom said he wanted his money back.

Cheap and easy credit with few question asked - that was the mode of operation almost WORLDWIDE. All asset classes collapsed almost overnight.

The issue may not be in the property sector this time around but there has never been as cheap or easy credit in the European market. The only reason it didn't impact property was because of the loan to income ratios imposed by the central bank. Have a look at all the other property markets across Europe (Excluding spain, italy etc)

Also you didn't notice all asset classes nearly collapsed at the same time earlier in the year before central banks jumped in.

Timing belt

silver2020 wrote: »

Some of the glass half empty crowd will be very disappointed. No discernible increase in arrears
https://www.lawsociety.ie/gazette/top-stories/home-loan-arrears-decreased-after-covid-payment-breaks/

Yes they think that Irish banks have already thrown the kitchen sink at it when they booked there provisions earlier in the year but the longer Covid goes on the more defaults there will be and not just in personal individuals. I expect a few more big name companies to get into difficulty when they try to refinance debt and possibly go insolvent if we have another extended lockdown.

Springy Turf

Public Service Post:

If someone refers to people who disagree with them as sheep, or perhaps just even just invent some strawmen and call them sheep, don't waste your time engaging with them.

cubatahavana

I just don’t get the hate for new build. I personally love them. Good specs, warm, energy efficient, good size and layout...

I can understand some people not wanting them, but it seems to be the norm and it baffles me. The argument against social housing doesn’t add up. Have a look at the pobal maps regarding deprivation indexes. Most small areas in 2016 have a good bit of social into them, no matter location.

https://maps.pobal.ie/WebApps/DeprivationIndices/index.html

tobsey

HotDudeLife wrote: »

Patience my friend, play the long game. This house of cards won't be standing much longer, huge crash coming in 2021-2022.

And the person you quoted won’t get a mortgage from any bank if that happens. How will a huge crash help them?

Dwarf.Shortage

silver2020 wrote: »

been hearing that so often and in reality it has only happened once in the past 30 years and that because the world had gone crazy on a property and lending ponzi scheme and no-one shouted stop til the guy at the bottom said he wanted his money back.

Cheap and easy credit with few question asked - that was the mode of operation almost WORLDWIDE. All asset classes collapsed almost overnight.

That is not happening these days. Some prices are frothy, some are great value (I bought a holiday home investment recently that was 75% below the price some fool bought in 2006 - I'll get 20% return by letting it on airbnb and be able to use it frequently)

Decent sized 3 beds are becoming available in Dublin for 300k - that's affordable for many. A 30 year 275k mortgage will be €1100 a month. You can fix it for 10 years for under €1150, or be sensible and go for 25 years @ €1275 a month

There is no deep recession even on the horizon

Examples?

943

cubatahavana wrote: »

I just don’t get the hate for new build. I personally love them. Good specs, warm, energy efficient, good size and layout...

I can understand some people not wanting them, but it seems to be the norm and it baffles me.

https://maps.pobal.ie/WebApps/DeprivationIndices/index.html

With new builds you get help to buy which is great, but you're also looking at several thousands added to the price. Not everyone has the 3.5 LTI for new builds even with the help with deposit. A second hand house while requiring saving, probably half the deposit amount of a new build

Majority of FTB saving to buy are also paying high rents.... even with help to buy you have to save a good chunk of that new build deposit if your income isn't high in the first place. So either way you are breaking your back saving. Except, you will get a LTI mortgage for a second hand 150k house that you wouldn't get for a new build. There are obviously exceptions and it is clearly working for some who have the income. It is a catch 22.

But a lot dont - if they did the deposit would be less of an issue in the first place. That and as above, there just arent many new developments in some areas..

At least that's my anecdotal experience and that of people my age group, but I could be totally off the mark and missing something too.

silver2020

Dwarf.Shortage wrote: »

Examples?

330k for 1250 sq ft 3 bed in Newcastle.
https://www.cairnhomes.com/new-homes/graydon/

290k for large 3 bed in Balbriggan
https://www.myhome.ie/residential/brochure/taylor-hill-balbriggan-county-dublin/4197010

Springy Turf

The main issue I have with new builds I have seen is that all the houses are completely on top of each other, usually no front garden, and usually on quite a small plot of land.

Yes, you are getting really nicely laid out houses with good floor space and great thermal efficiency, and that definitely has a lot of appeal, but (in Dublin anyway), the most expensive thing is the land. With a new build, you are getting a lot less land for your money.