Irish Property Market chat II - *read mod note post #1 before posting*

Bass Reeves

https://www.boards.ie/discussion/comment/120197001#Comment_120197001

House prices were never in the CPI. They are a capital expenditures and are consider to be an asset.

Mortgage interest is AFAIK as is house rent.

wassie

https://www.boards.ie/discussion/comment/120197001#Comment_120197001

By the way, the only reason house prices are not included is because that would have made overall inflation look higher which would have made the politicians look bad.

I suggest you google why houses prices arent included in CPI before making nonsensical statements.

PommieBast

https://www.boards.ie/discussion/comment/120196824#Comment_120196824

I do wonder whether the vagueness of some of the stuff on there is outright deliberate..

realitykeeper

https://www.youtube.com/watch?v=qTJ_uxrR-Cw

This video gives an interesting perspective on the housing market over in the UK. But I think there are parallels to what has happened here.

DRedSky

https://www.boards.ie/discussion/comment/120197126#Comment_120197126

I’d just like to ask about your figures.

Biggest lender in ireland is AIB and they’re 4.2% for 5 year fixed when i google it. So if I’m in the majority and my rate is to be 4.2% over 5 years and i’m looking at houses right now and I’m a long term aib customer and I’m borrowing 400k like you suggested then if rates were to increase again by 0.5% in march which is a done deal before i get to draw down…. So I’m now looking at possibly 4.7% (if they pass on the next one within 24 hours like the last one) and we then apply that to 400k then you’re saying i’m only down 100 or 200 euro per month compared to me taking out a 400k loan for 5 year fixed rate with Aib before they increased rates by 1.5% cumulatively over recent months, can you confirm this is what you’re saying?

I’m surprised by that.

Thargor

I had to google it to see if it was real or a pisstake but sadly its real:

https://twitter.com/crazyhouseprice/status/1621268351707234306

DRedSky

https://www.boards.ie/discussion/comment/120197437#Comment_120197437

on the 2nd half of your post, that HAD been the case, hence the delay in irish banks being slow to pass on increases but recently the goal posts have shifted with the arrival of other options like trade republic with 2% returns and while irish banks had been slow to pass on mortgage interest rate rises they have been woefully slow to pass on interest on savings too until recently but they are under pressure to do so now.

They will need to fund that, obviously.

This is why they’re responding faster now, like AIB did yesterday and the variable rate also went up up which was telling. It’s a changing climate.

Bass Reeves

https://www.boards.ie/discussion/comment/120198527#Comment_120198527

Fixed rates do not necessarily follow the ECB rate. They are linked to 5 year cost of funds. As markets predict the internet rate increases stopping they will drop longer term rates.

In the mid nineties when Ireland tried to keep the link with sterling as the UK decided not to enter the euro Irish interest rates rise to 15%.

A lad I know got badly caught he fixed at 9.5% for 10 years. Within 12 months interest rates were 4-5% and remained at that and lower for the next 10years

Ozark707

https://www.boards.ie/discussion/comment/120199005#Comment_120199005

At least the loan amounts were not so bad in the mid nineties. A jacking up of rates now will cause a whole deal of hurt. Incredible to see how the rate rises are playing out in some other countries.

35% of Canadian homeowners say they can handle the current benchmark rate of 4.5% for an average of <10 months before they would be forced to sell/vacate their homes. "If even a small fraction of those sell, Canadian housing is going to have a bad time

https://twitter.com/AvidCommentator/status/1621305236588748800

Timing belt

https://www.boards.ie/discussion/comment/120199433#Comment_120199433

Loans weren’t as big in the 90’s and neither were wages….it’s all relative!!!!

you also need to remember that rate rises won’t impact all mortgage holders the same and the fact that LTV’s on the overall bank books implies that there are a lot of mortgage holders where rate rises will have a reduced impact on them. Also the trend of a reduction in overall mortgage book size as more mortgages are repaid than issued also indicates that the same.

Bass Reeves

https://www.boards.ie/discussion/comment/120199433#Comment_120199433

Different countries different structures. A lot of them were 4.5+X income. There was a near riot when we moved to 4X and our max is 4.5X. The UK is 4X and 6X max. I am sure about Canadian rules but is it similar to the US where loans are non recourse.

In Ireland you have to stop paying for a bank to repossess and that is a 5year process. If you go into a bank if you are in trouble they will be more than willing to allow you to reduce payment.

Discressonary spending is the problem in this country. People think that no matter how much the coffee, takeaway, car service, diesel, eating out goes up by you are entitled to it.

At present this is not a recession.. local pubs have dropped the pint of Coors by 50c/pint. There was obviously resistance to the price increase.

Just thing about it a chicken roll is gone to 5+, a takeaway is 10+, a Chinese is nearly 15, a burger in a restaurant is 15+, a starter or desert is 8+.

A recession sorts the men out from the boys. You restructure your spending. It will take the top off building costs but you will not see prices collapse. With a 10%+ equity in the game you will not walk away.

Donald Trump

https://www.boards.ie/discussion/comment/120196636#Comment_120196636

The only buyers who benefit from increasing rates are cash buyers. Anyone waiting on a house price correction should not cheer interest rate rises as its ultimately a 0 sum game.

What about buyers who bought similar in 2007 vs say 2014?

Had they the same repayments in 2022?

Villa05

You can feel the frustration of this uk based CNN presenter when he declares his mortgage repayments have doubled in 8 months. I'm amazed at the naivety of those on the front lines of business. How were they so blind to what was coming? Is this group think all over again

https://youtu.be/Lk64zV6PuYc

Bass Reeves

https://www.boards.ie/discussion/comment/120200050#Comment_120200050

A person who bought in 2007 might not have got a mortgage in 2014. A lot of people buying from 2012-2015 had substantial cash savings. The person who bough in 2007 is better off than the person who could not buy in this period and who failed to buy since.

99% of people are better of because they bought a house no matter when they bought it

Villa05

https://www.boards.ie/discussion/comment/120200191#Comment_120200191

99% of people are better of because they bought a house no matter when they bought it

Highly questionable stat considering the tripe that was built during the celtic tiger and the cost of buying and remedies

tom_murphy112

https://www.boards.ie/discussion/comment/120197377#Comment_120197377

I would say claiming we are bankrupt is extreme. But at the same time, we have been having some great tax revenues from Corporations. We are spending every penny that we earn, very little has been put to long term projects like building social housing. But rather has moved to leasing which is going to cost the state the same money during good time and bad times.

The idea that we will always have this great cash flow from corporation is just but a dream, when this stops the state will have to cut cost (as it happened during the last crash) and/or increase taxes for the ordinary citizen (as it happened during the last crash)

Also your assertion that we should be using GDP as it looks better is not valid in the Irish context - https://www.politico.eu/article/ireland-gdp-growth-multinationals-misleading/

Donald Trump

https://www.boards.ie/discussion/comment/120200191#Comment_120200191

That wasn't the question though.

theboringfox

Rate rises won't affect cash buyers or people who were looking to have mortgages well within means. It will hit those seeking to go to full 3.5x and more.

If you take it a 5 year fix might cost 2% more than last year. Then over 5 year period on say 400k mortgage (buying 500k house at 80% loan to value) thats 8k pa and 40k over the term of 5 year fix more they are paying vs same 5 year fix last year. So for buyer to be in same position financially as prior year then a 40k lower purchase price would be needed. I.e. if house was now 460k they are no better off (lower upfront payment but lost again in higher int payments).

So Im not saying prices drop but it does impact purchasing power and ability to service debt for lot of people. Maybe supply is so bad and savings so high that buyers shrug it off. Time will tell.

PokeHerKing

https://www.boards.ie/discussion/comment/120200191#Comment_120200191

Anecdotally I'd have to disagree. Myself and most of social circle bought between 2012-2015 with standard 10/20% deposits.

Deub

https://www.boards.ie/discussion/comment/120197126#Comment_120197126

Hardly back breaking for most people who are considering getting a mortgage at this level.

Do you really believe this? Do you think adding an additional 2 monthly mortgage repayments per year is easy for a couple at 57k gross per year each?

I would be surprised that people on this salary have 3.5k easy on hand without making any sacrifices somewhere else.

Villa05

https://www.boards.ie/discussion/comment/120200420#Comment_120200420

Would have to agree, Banks are healthy going into this mess and the higher rates increase there revenues. If your a good candidate for a mortgage you'll get one.

Current prices need even further supply squeeze and state buying as investment funds cool there jets.

At some point the state will have to switch to supply measures over demand as the backlash from the public increases

https://www.limerickpost.ie/2023/02/02/limerick-man-earning-e900-a-week-is-sleeping-in-doorways/

Donald Trump

https://www.boards.ie/discussion/comment/120200420#Comment_120200420

Do you think that your mortgage repayments in 2022 were less than someone who had bought a similar property to yours in say 2007? I'd imagine they were. Possible trackers notwithstanding!

combat14

https://www.boards.ie/discussion/comment/120200569#Comment_120200569

throw in rising electrictiy, rising grocery bills, rising heating bills, extra fuel bills, kids, creche payments, two car payments into the mix and then try and come up with two extra mortgage payments a year some people are so out of touch 😑

Bass Reeves

https://www.boards.ie/discussion/comment/120200616#Comment_120200616

How can you not include trackers. 70%+ of loans were trackers and the competition back then had them as low as 0.75% with funds.

When you allow for that fact many of the people were probably no worse off. Allow for the fact that they have 7 years extra paid off there loans and if they were renting they would have probably forked out 35-40k in those seven years.

https://www.boards.ie/discussion/comment/120200420#Comment_120200420

If you had a permanent job it was grand many were squeezed out because they had no jobs, were in and out of work or had temporary contracts.

PokeHerKing

https://www.boards.ie/discussion/comment/120200721#Comment_120200721

Agreed. Recession is only a thing to the unemployed. I and most people I knew never lost jobs and went on about life as normal. Buying houses etc.

I could be wrong but I doubt cash buyers made up much more of the market back then than they currently do.

Donald Trump

https://www.boards.ie/discussion/comment/120200721#Comment_120200721

Not sure why you are trying to argue something different and irrelevant. The original point I responded to was:

The only buyers who benefit from increasing rates are cash buyers

Even taking trackers into account (I said notwithstanding, not ignoring) it is the case that there would be circumstances for people who waited who would have been in better off financial position compared to those who jumped in at the top. That you might know one or two cases which were not better off does not prove that the only part of the original post. Talking about "many" does not prove an assertion as to "all".

Mr Hindley

Latest picture on supply, for what it's worth. Will be interesting to see if it starts to go up again over the spring, or stays flat. I get the sense that after a sudden flurry immediately after Christmas, things are stagnating a bit, with more (but not all properties) lingering on the market.

combat14

https://www.boards.ie/discussion/comment/120200909#Comment_120200909

i get the sense that it is january and that there are approx. 4000 more homes on the market on daft compared to Jan last year or a 30% increase on last year ((17000-13000)/13000) these figures can be interpreted many ways too soon to say anything definitive just yet

Donald Trump

I thought this was interesting. Reminded me a bit about the Banks selling off branch portfolios before the crash.

In the below, the seller of an ongoing concern is willing to effectively "lend" 55% of the purchase price to the buyer.

https://www.independent.ie/business/commercial-property/galway-student-investment-offers-65pc-yield-and-vendor-finance-42324017.html

Villa05

https://www.boards.ie/discussion/comment/120204242#Comment_120204242

Over 1,000 per month per room, 2,000 for a 1 bed apartment

Pricey