Effect of maturing SSIAs on Property Prices

Fredser

Howdy people,

Anybody any predictions on the title of this post or any views on how the prices will go over the next year?

F

RuggieBear

inflation

Fredser

Vague

RuggieBear

Fredser wrote:

Vague

lol....sorry. IMO the prices of houses will suddenly just bump up to the max SSIA amount (12-15k???)

Fredser

Yet another example of government "incentives" being lost in bricks and mortar.
For example: stamp duty thresholds, SSIA etc etc

F

defiantshrimp

Fredser wrote:

Yet another example of government "incentives" being lost in bricks and mortar.
For example: stamp duty thresholds, SSIA etc etc

I couldn't agree more, this country's property obsession is quite worrying.

I doubt that house prices will increase much since the maximum SSIA not very big in comparison to the price of a house, then again people could use them to put deposits on new houses and fuel and orgy of borrowing. In fact that seems more plausible.

nesf

defiantshrimp wrote:

I couldn't agree more, this country's property obsession is quite worrying.

I doubt that house prices will increase much since the maximum SSIA not very big in comparison to the price of a house, then again people could use them to put deposits on new houses and fuel and orgy of borrowing. In fact that seems more plausible.

I couldn't agree more. I know quite a few people for whom their SSIA is their house deposit. They aren't planning on buying a house immediately on the SSIA maturing, but it just seemed like the best way to get a good portion of the deposit together.

Personally, I'll be ploughing mine back into investments. I'm hoping the government do something "similar" again soon It really was the easiest way to save. I did it for the max amount and after the first few months, I just got used to the money going out at the start of the month.

RuggieBear

nesf wrote:

It really was the easiest way to save. I did it for the max amount and after the first few months, I just got used to the money going out at the start of the month.

ditto...i actually consider it a bill i have to pay rather than saving

johnnyc

the ssia will not have an effect on the market come on the top return is something like 20,000 euro, most people will have a return of 10,000 that will have no effect on the property market. The only effect that ssia could have would be pensions, holidays, insurnace or diy stores

nesf

RuggieBear wrote:

ditto...i actually consider it a bill i have to pay rather than saving

Yeah same here...

Kinda like a "good" bill for a change

nesf

johnnyc wrote:

the ssia will not have an effect on the market come on the top return is something like 20,000 euro, most people will have a return of 10,000 that will have no effect on the property market. The only effect that ssia could have would be pensions, holidays, insurnace or diy stores

Well the "smart" plan is to invest it in a good pension scheme. If you're in your 30's.

If you are in your early/mid 20's then... well, in my opinion, and this is only opinion, there will probably be a big shake up of the pension system in the next 10 years and circumstances could change a lot. Also at that age, you probably don't have many physical assets and such so maybe putting it towards a house makes more sense than a pension.

I'm not sure really, it's a complex question.

full forward

A friend of mine believes that once the SSIA's have been spent the housing market will start to fall back. He's putting a number of his investment properties on the market later this year.

Next year will be a great year for car sales and holidays.

RuggieBear

full forward wrote:

A friend of mine believes that once the SSIA's have been spent the housing market will start to fall back. He's putting a number of his investment properties on the market later this year.

Next year will be a great year for car sales and holidays.

Exactly....there will be no bargains to be found in the next little while

Fredser

full forward wrote:

A friend of mine believes that once the SSIA's have been spent the housing market will start to fall back. He's putting a number of his investment properties on the market later this year.

Agreed. A "friend" :rolleyes: of mine is going to sell-up his investment properties this time next year.

F

boa-constrictor

johnnyc wrote:

the ssia will not have an effect on the market come on the top return is something like 20,000 euro, most people will have a return of 10,000 that will have no effect on the property market. The only effect that ssia could have would be pensions, holidays, insurnace or diy stores

I don't agree. I think it will have a significant affect on house prices. There are still plenty of people who have sufficient income to get a mortgage but dont have the deposit required. It might only be 20k but it could be the 20k that counts. Lets face it, if you are renting and you get you SSIA and go and blow it on a second hand Mercedes CLK - well you'd have to be a twat wouldn't you. If a person cant buy a house when they get their SSIA they'll never buy one.

I think there will be an uplift in property prices followed by a correction, because the rental market will soften considerably and all the investors will sell.

antoinolachtnai

The other thing is that parents will chip in and brothers and sisters will get together to buy first-time properties. 20k doesn't sound like a lot, and it isn't in the property market, but 40k or 60k is quite a chunk.

RainyDay

You won't be able to find a builder for love or money next year - There will be a glut of conservatories & extensions once the SSIA money comes through.

johnnyc

antoinolachtnai wrote:

The other thing is that parents will chip in and brothers and sisters will get together to buy first-time properties. 20k doesn't sound like a lot, and it isn't in the property market, but 40k or 60k is quite a chunk.

brother or sister combine to buy a house that sounds like a receipe for disaster!

nesf

johnnyc wrote:

brother or sister combine to buy a house that sounds like a receipe for disaster!

Depends on the siblings in question tbh. I'd happily buy a house with either my brother or my sister.

johnnyc

what happens when brother or sis get married i suppose u can develop an extension to the house with the ssia

nesf

johnnyc wrote:

what happens when brother or sis get married i suppose u can develop an extension to the house with the ssia

I'd congratulate them, buy him/her a nice wedding gift, and then buy out his/her share after they had found a suitable house for themselves and their partner.

garred

Don't know if it will affect property prices over here as much as people think. Personally I reckon it will affect property prices overseas Bulgaria, Turkey, France etc where their SSIA will go a lot further and plus the fact that people are looking for a better quality of life. So I think they will be buying more Holiday/investment properties abroad than over here.

MG

The two possibilities I subscribe to are:

1. The SSIA money is already built in to house prices through expectation and borrowing against the SSIA

or

2. It will cause a jump in house prices which will actually burst the bubble within a year. House prices are overvalued IMO, though difficult to say by how much, it could be 2% or 20%. A slowing of prices could allow the core of the bubble (ie underlying wealth) to expand and converge with house prices to realistically value houses. A sudden injection of cash will expand the bubble and make a crash more likely.

Generally, its very worrying how much of the workforce is directly or indirectly employed in house building, a non productive asset.

However, my money is on option one. Generally, people have already borrowed against the SSIA and will need the cash to reduce their debts.

soma

Interesting thread - I came across it as I was searching the web for this very question..

People have made statements like '20k isnt much in terms of the market'. They seem to be missing a sizeable piece of the picture here.

If a person has a nice salary but doesnt have a 20-30k deposit saved right now (quite a typical scenario i think, saving while renting is incredibly difficult) then you cant get on the property ladder.

But if you hand that person a large sum like 20k - surely a percentage of those people will think it's 'now or never' to use that money as the basis for a house deposit..?

I know alot of 20-somethings are possibly/probably borrowing house deposits now from their parents, the deal is they pay them back when SSIA matures. (negligible impact on market)

but I worry about all the 20 somethings who live at home in dublin (just look at the number of cars outside people's homes these days - adult children) who see the SSIA as their escape to a deposit and a rush of buying.

The whole SSIA thing is just another factor adding to my confusion (a late 20-something male wondering whether to get into property while I can still touch the 'coat-tails' of prices).

soma

MG wrote:

Generally, its very worrying how much of the workforce is directly or indirectly employed in house building, a non productive asset.

I have tried to explain this concept to a few people but usually just recieve blank stares.

Where is our indigineous industry going to come from if we pump almost all available capital, talent and resources into bricks & mortar..?

Especially when manufacturing industry is disapearing by the day. (Tayto the latest casualty)

nesf

soma wrote:

Interesting thread - I came across it as I was searching the web for this very question..

People have made statements like '20k isnt much in terms of the market'. They seem to be missing a sizeable piece of the picture here.

If a person has a nice salary but doesnt have a 20-30k deposit saved right now (quite a typical scenario i think, saving while renting is incredibly difficult) then you cant get on the property ladder.

But if you hand that person a large sum like 20k - surely a percentage of those people will think it's 'now or never' to use that money as the basis for a house deposit..?

I know alot of 20-somethings are possibly/probably borrowing house deposits now from their parents, the deal is they pay them back when SSIA matures. (negligible impact on market)

but I worry about all the 20 somethings who live at home in dublin (just look at the number of cars outside people's homes these days - adult children) who see the SSIA as their escape to a deposit and a rush of buying.

The whole SSIA thing is just another factor adding to my confusion (a late 20-something male wondering whether to get into property while I can still touch the 'coat-tails' of prices).

Good points.

My view is that schemes like the SSIA are excellent and easy ways to save. Hopefully they will help people with the idea of "putting something aside, no matter how small" every month.

As a deposit, the SSIA makes sense. But unfortunately, 20K isn't going to cover most deposits these days. And the vast majority of people didn't take out the max size SSIA for various reasons.

I think there will be a clear split between people on this. Some will feel the need to splash out immediately on some luxury or necessity that they've always wanted and spend every cent. Some will reinvest every cent they get back out some hoarding instinct or wish to "make their money work for them".

I think most people will fall somewhere in the middle of this. We (in my opinion) will see a moderate increase in spending by people recieving their SSIAs and a moderate tendency to reinvest the money in some fashion.

Then again, I could be totally wrong. People have an annoying tendency to not act rationally.

MG

soma wrote:

I have tried to explain this concept to a few people but usually just recieve blank stares.

Where is our indigineous industry going to come from if we pump almost all available capital, talent and resources into bricks & mortar..?

QUOTE]

Yeah this is a vital point. House building is not really a value added/wealth creating activity. Our 12% employment in construction compares with something like 6-8% in other developed countries. (approx 60% of this 12% is in housing - frightening!). If you added 4-6% to the unemployment rate, we wouldn't be laughing so much at Germany and France.

But, they say, there is a magical thing called demographics which will save us. I'm not sure about this. Most of the immigrants are Eastern Europeans working in the construction industry which means that housing growth is being fed by immigrants who come over to work in housing! Sounds like a recipie for trouble.

Jivin Turkey

The majority of young people I know are planning on using their SSIAs to go travelling to Australia and what not. Id imagine their will also be a large boom in car purchases.

Most people in their early twenties are not saving the max amount and will probably come out with < 10k from the SSIA which is hardly enough to be putting towards a deposit without further assistance.

Id say there will be a big increase in home improvments. Should be another good year for the builders.

Board@Work

I reckon there will be a surge on new cars next year as people will suddenly have a bit of money and will treat themselves with a car upgrade.

I think this is good news for me who is planning on buying a second had car next year and hopelfully due to the increased number of trade ins I should find a nice bargain..

I say hopefully

Jivin Turkey

I think its a tough one to call.

A few couples that have sacrificed one of their cars in order get the money together for a house for their family might use the opportunity to purchase a reasonable second hand car.

Younger people coming out with c.10k will be in the market for a good second hand motor.

Obviously people will trade in their cars and treat themselves with a new one too, but its swings and roundabouts really.