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

SharkMX

https://www.boards.ie/discussion/comment/121263677#Comment_121263677

Maybe they should declare the country a BPZ - Building Pressure zone and cap the amount that building houses can increase by to 2% per year. :)

timmyntc

https://www.boards.ie/discussion/comment/121263677#Comment_121263677

Interest rates making finance more expensive/harder to acquire, and labour costs gone up due to earlier inflation

Relax brah

About to sign contracts on first property - going through avant (ballache but definitely best rate with 20% LTV)

Question is:

30 year fixed rate at 4% (uncapped early pay off with zero penalty)

or

4 year sized rate at 4% (capped pay off) and run the risk of inflation rates continuing to rise

Thoughts?

Bass Reeves

https://www.boards.ie/discussion/comment/121267698#Comment_121267698

really hard one to call. Early pay off option you will need to read there T&C. I cannot see inflation being severly curtailed, however there is a lot of grey(older people with) money around so to counter that you need low rates

Villa05

Historically 4% on a mortgage is still a very low rate. That was my opening rate in 2014. I'd be inching towards locking it down for the 30 years with early repayment options

Bass Reeves

https://www.boards.ie/discussion/comment/121269330#Comment_121269330

From 2012-2019 Irish mortgage rates were artificially higher than the rest of Europe doe to the lack of liquidity of our banks. If interest drop again then the the mortgage rates should follow them.

However 4% is tempting. Having said that I remember at a time of high interest rates in the 1990's a friend fixed @10% for ten years he as at that while the rest of us went down to 3&4%

kippy

https://www.boards.ie/discussion/comment/121267698#Comment_121267698

Can you afford the 4 percent repayments?

The reality is, it is very hard to see interest rates drop below that at a significant enough rate that might be attainable by an existing homeowner, that would make a major dent in the repayments versus the risks of higher rates that that over the time period mentioned. There is a lot to be said for a fixed rated mortgage, the certainty it gives you makes for easier budgeting and over time in any event the real 'cost' of the mortgage gets lessened, again due to standard inflation.

4 percent at the moment for that long a time span wouldn't be normal I would think and assuming you can afford the repayments I'd be going with the longer term certainty.

DataDude

https://www.boards.ie/discussion/comment/121267698#Comment_121267698

I think this is an easy call with the 30 year fixed for one main reason. The risk is not symmetrical.

If you fix short term and then rates rocket higher. There’s nothing you can do but suck up the full cost of higher rates which could cost you 10s/100s of thousands in a disaster scenario.

If you fix long term and rates do suddenly go negative again. The downside risk of your decision is capped at the max 2% break fee which is written into Avant mortgages. This early redemption cap plus the 10% overpayment feature without any penalty massively mitigate what would otherwise be the downside of long term fixed rates.

Relax brah

https://www.boards.ie/discussion/comment/121269422#Comment_121269422

So you recommend the 30 year?

thanks to all for replying and offering your guidance. Massively helps, i I don’t want to spam the thread by thanking you individually all individually but genuinely it means the world to us.

We are abit confused by it but we most certainly can afford the monthly repayments on the fixed 30 year loan.

I am fortunate enough to be in a job that I get non-standard large bonuses throughout the year so paying off larger chunks without a fee is what appeals to me too (with the steady fixed rate.)

DataDude

https://www.boards.ie/discussion/comment/121269884#Comment_121269884

Yes that’s what I’d recommend.

Use your bonuses to make the 10% overpayment each year penalty free. If 2-3% mortgages do become the norm again in a few years time (I personally think this is highly unlikely but just an opinion), then just get in touch with a broker to consider breaking out.

In the meantime enjoy the certainty that your 30 year fixed rate brings.

timmyntc

On the topic of rates..

https://www.businesspost.ie/analysis-opinion/michael-savage-ecb-may-have-little-choice-but-to-start-hiking-interest-rates-again/

traders are still pricing in inflation above eurozone target, so further rate rises may still be on the cards

Villa05

In the USA, 18 months ago the 30 year mortgage rate was 3%, last week it passed 8%

Craig_David

https://www.boards.ie/discussion/comment/121270368#Comment_121270368

Curious.. If one were to take out a 30yr mortgage in the U.S, how long are you actually fixed to 8% for? Is it similar to here in that it would be 8% for 3/5/10 years for example and then roll to variable or refix at a new rate?

DataDude

https://www.boards.ie/discussion/comment/121270414#Comment_121270414

No, a lot (perhaps most?) Americans fix the mortgage for the full duration of their loan.

Wasn’t a feature of the Irish market until Avant brought them in. They make a lot of sense. Normal people have no real business gambling on whether rates will go up or down through short term fixed rates. The security of fixing your payment for the full duration of the mortgage makes a lot of sense - hopefully it will become more widespread here.

One interesting phenomenon however is whilst most Americans have been protected from these rising rates (great for them), such sharp moves make it almost impossible to move as you’d give up your 3% 30 year rate which is now worth 100s of thousands. So the market becomes very much locked up with low inventory as nobody up or downsizes.

amacca

https://www.boards.ie/discussion/comment/121264286#Comment_121264286

😂 indeed...but wouldn't that be counterproductive, if they couldn't make an auld buck sure the developers wouldn't bother developing!

Aren't there much better targets like them auld evil landlords

If the pricks stayed as far away from Interfering as possible and enforced consequences on bad actors the market would be in a much better state imo

Padre_Pio

https://www.boards.ie/discussion/comment/121257667#Comment_121257667

How would they "make off with the formulas"?

Baby formula is imported to China since they don't have the cattle herd or soy to make it..

Padre_Pio

https://www.boards.ie/discussion/comment/121260016#Comment_121260016

A broken clock is right twice a day.

I've seen posters claim almost weekly for the past 5 years that the property is only months from collapse.

Villa05

https://www.boards.ie/discussion/comment/121266526#Comment_121266526

I believe interest rates are a soft cost and are not captured in construction costs.

They are separate in the esri publications on the total cost of housing delivery.

I'm open to correction as always

timmyntc

https://www.boards.ie/discussion/comment/121270867#Comment_121270867

The SCSI report quoted references increased labour costs as main driver (it pertains mainly to rebuilds) but from talking to several small to mid sized builders, cost of (and access to) finance is hitting hard.

Padre_Pio

https://www.boards.ie/discussion/comment/121270901#Comment_121270901

People probably failing the stress tests to 5.5 or 6%.

SharkMX

https://www.boards.ie/discussion/comment/121270611#Comment_121270611

I looked back through a few old threads. There are some doozies from 2009 where people explain in great detail the value they get out of the rent they are paying and why would anyone ever want to buy again when they can rent and get twice the property for the same price.

Villa05

https://www.boards.ie/discussion/comment/121273075#Comment_121273075

That was the best time to be a renter being honest and continued for another 3 to 6 years depending on location.

SharkMX

https://www.boards.ie/discussion/comment/121273537#Comment_121273537

A bit of forward thinking was lacking at the time for a lot of people though.

lordleitrim

https://www.boards.ie/discussion/comment/121273075#Comment_121273075

Renting will always be a more favorable option if you are younger and single and want to be close to urban centres, maybe starting out in your career, moved to a new town or city and unsure if this will be a longterm move for you and you've yet to build up a deposit or mortgage approval earnings. But after that, once you become attached to an area, have the income to buy and/ or planning a family etc then buying absolutely trumps long term renting.

Timing belt

https://www.boards.ie/discussion/comment/121272769#Comment_121272769

I might be wrong but think he is talking about the builder/developers access/cost of finance to build rather than buyers failing stress tests

Ray Palmer

https://www.boards.ie/discussion/comment/121273950#Comment_121273950

I think you may not have been about then because it wasn't about youth and renting. There were a lot of people taking delight in the house price crash laughing at people who bought property. People they knew who were living in remote locations and long commutes were paying higher mortgages than their rent close to the centre of things. People who got council support to buy property abandoning them as it was higher than rent.

Great time to rent and they thought it would never end no matter warnings. Then while supply was dwindling and rents rising they started getting mad claiming a coordinated plan to enrich politicians friends. The reality was rent was be subsidised by landlords well below true cost and were always going to recoup losses later if they could hold out. Tenants laughing at new charges added to landlords because they couldn't pass them on ignoring the fact that they would be passed on when they could.

Don't forget the public didn't want investment into the construction industry when the ERSI warned that there were not enough being built for the future. So the government didn't but that then became the government conspired to push house prices up.

Increasing restriction and charges on landlords was hailed by the general public but warning landlords would sell up were seen as nonsense. Even while it is happening people are still saying it isn't happening and claims the property doesn't disappear so it makes no difference yet we can see less property to rent and higher demand.

There are some people out there who think because they can see dangers from how things are think they are really clever. Very easy to do but everything has danger and you have to eventually decide what to do for yourself. I know there are houses in Dublin selling about the height of the market rate of the past, the difference is there are multiples of them not the odd one like it was at the peak. Property sales dropped before the crash and not many bought at the peak and many who weren't buying then don't realise this and think everyone bought at peak prices.

The public really have a lot to do with the situation and will always blame the government there is no magic party that can sort the mess the public pushed for.

lordleitrim

House prices in Dublin now falling by almost 2%

https://www.irishtimes.com/business/2023/10/24/house-prices-in-dublin-now-falling-by-almost-2/

While this should be welcome for househunters, the drop mainly seems to be in higher end homes. Does this actually put mid or lower end house hunters at a disadvantage as now we have a situation where higher end buyers who would have considered more high end homes are being priced out f same and they are now starting to compete with the buyers with less purchasing power of the more modestly priced homes? Does this mean lower or mid priced (say under 500k in Dublin) homes could continue to rise?

Timing belt

https://www.boards.ie/discussion/comment/121278827#Comment_121278827

If sustained for a long period it would more than likely just translate to less supply in low/mid priced as you would have less people trading up.

Villa05

https://www.boards.ie/discussion/comment/121278753#Comment_121278753

Welcome back Ray

There were 2 types of landlord in the celtic tiger

1 Those that ran it as a business and raised rent wherever possible

2 Those that ran it as pension for when they retired. In general they were happy if there mortgage was being coverd by rent

Savvy renters targeted no 2 that purchased in the late 90's early noughties of which there were many. Renters would mourn there departure from the market and was the main factor in I purchasing then as it was a mechanism to lock down the rents of that time into the future.

I would not agree with your general assessment of renters. This was the era of job bridge and tight lending. Most of today's first time buyers had no chance of raising the funds to buy as they were the chosen ones to pay the highest price for the crash while being the least at fault

Your post lacks gratitude for there sacrafice to ensure your property/asset prices recovered

Again, welcome back to the debate

Ray Palmer

https://www.boards.ie/discussion/comment/121281549#Comment_121281549

Such a completely limited view point as there are certainly more than 2 types of private landlords with many buying before the only period of time you seem to see.

There is a lack of gratitude because there is nothing to be grateful for. Nothing done has sorted the situation and leaves landlords subsidising tenants by penalty of law. If I had sold the property and invested in anything that rose in price you wouldn't expect me to be grateful and the same applies to property as nobody was trying to help landlords.

Magic savvy tenants who somehow know the financial situation of their landlords never existed. It is such fiction and insulting to both tenants and landlords.

I have no idea what you are talking about with my "general assessment of renter". The public were delight with very ill conceived ideas where they saw landlords funding them, the fact these policies are responsible for higher rents is being ignored.

Reports on availability of rentals and those for affordable rents are ignoring all the people who have below market rents. Landlords are paying for that but the very slight budget change does not compensate for the increased costs while rents are artificially kept low.

I doubt I will be contributing much more to the debate as their are certain people (get a mirror) who never really debate but just shout down people or just make the same argument proven wrong many times.

I have friends, family and work colleagues that I feel sorry for due to accommodation options. None of the reason are my fault or responsibility but there are those who will blame me just because I have property and expect me to be grateful because the property market is a mess. I am not and never will be grateful for bad planing even if people try to claim I benefited or even if I do that was never done for me.