100% Mortgage Anyone

jhegarty

First Active is to offer first-time buyers a mortgage covering 100% of the value of a home.


First Active says customers may initially be required to fund items such as a booking fee or a deposit.

But, on closing the sale, the mortgage cheque drawn down will cover 100% of the value of a home.


Source : rte.ie

KTRIC

That's fantastic, about bloody time too

Martina

First Active offers 100% to first-time buyers

July 13, 2005 12:54

First Active is to offer first-time buyers a mortgage covering 100% of the value of a home.

The bank says that, based on a 92% mortgage, a first-time buyer would be left €20,000 short of the purchase price for a home valued at €245,000.

First Active's head of marketing Brendan O'Hora said many first-time buyers could afford to repay a mortgage on the full value of their home, but were unable to get a 100% mortgage.

First Active says customers may initially be required to fund items such as a booking fee or a deposit. But, on closing the sale, the mortgage cheque drawn down will cover 100% of the value of a home.

The lender says the 100% mortgage will be available across its suite of mortgage products.

MorningStar

Not sure if that really is a good idea. Does that not just increase the house prices in the end meaning less people can afford houses? I'd like for the US fixed interst rates work. You borrow at one rate and that's it a better rate comes along you refinance and then have the new rate and you can stick with it. So if there is a low rate during you mortgage life you can get it and then stay with it.

Imagine never worring about intrest rates. THis would benifit all instead of causing more problem.

vibe666

finally some good news for those of us trying to get on the ladder.

can't wait to tell the g/f.

just waiting for the catch now. there's always a catch.

babaduck

It's not available for studio or 1 bed dwellings, but apart from that it's open to all FTB's only

HOB-it

just dont get your hopes up to much people. UB doing the same but only applying it to professionals (accountants - doctors - etc.). if it is for all FTB then great but when you dont have a deposit they means test it (a certain % of your net take home pay). word of advice. get rid of any loans you may have now (mainly the ones you've taken out for holidays or that new telly). if youve a car loan with a couple of grand on it - get rid of it. they look at all your monthly outgoings which wouldnt be considered normal living expenses.

Bluehair

Imho it's a very bad sign. 100% for any ftb?? Thats nuts. Indicates a drop in mortgage applications and resultant demand for ftb 'starter' homes. I wouldn't touch property in Ireland today with a 50foot pole. The market is so overheated it's scary.

Einstein

I too agree that this isn't the best thing for homebuyers.
Remeber, that extra 20K that's covered in the 100% mortgage is charged at the % rate of the mortgage you choose.
ie. €20K @ x % over 25 years = a lot more than working your ass off and saving up the deposit like most people do.

ionapaul

Bluehair wrote:

Imho it's a very bad sign. 100% for any ftb?? Thats nuts. Indicates a drop in mortgage applications and resultant demand for ftb 'starter' homes. I wouldn't touch property in Ireland today with a 50foot pole. The market is so overheated it's scary.

Agree 100%. They are now THROWING money at the overheated housing market. It is alright for those looking for a place to live for the rest of their lives / long-term and who are happy to buy a house that may soon be worth much less than what they paid for it...but those planning to buy now to 'step up' the ladder in a few years will be in trouble.

woody

This is not going to help people just gonna put more in debt and also they will loose sight of saving etc...


The Property culture is gonna get a lot more expensive

vibe666

on reflection you may well be right. there's always a sharp drop in prices after a property boom, and from what I understand, the bigger the boom the sdharper the drop off at the end of it. the problem is, that most FTB's are limited to buying in the €250-300K region, and the deposit neede for that is €20-30k, which just isn't reasonable for people who are just starting out to be able to find.

100% might not be the answer, but it's a step in the right direction, and will hopefully stimulate better deals from other lenders for FTB's looking for a mortgage.

then there's my mate who moved to thailand and built a 4 bedroomed house (to UK standards) on an acre of land on a beach, and paid for the whole lot on a 40k mortgage at 2%. not especially relevent i know, but it always makes me smile thinking of him out of the rat race!

jhegarty

Divers wrote:

I too agree that this isn't the best thing for homebuyers.
Remeber, that extra 20K that's covered in the 100% mortgage is charged at the % rate of the mortgage you choose.
ie. €20K @ x % over 25 years = a lot more than working your ass off and saving up the deposit like most people do.

don't forget , its not just spend 2 years saving €20k , but its two years saving €20 while paying rent (which is someone elses mortgage)

garred

Yeah just heard it on the radio this morning. Think its a great idea. I know some are saying FTB's will get in over their heads but lets give them some intelligence, at the end of the day they will work out what they can afford to pay back.

Sleipnir

Danderous idea. We're already over-borrowing to terrifying degrees and this will only make things a lot wore.
1.5 billlion borrowed p.m. will probably go to 2.5 billion borrowed p.m.

Sleipnir

Danderous idea. We're already over-borrowing to terrifying degrees and this will only make things a lot wore.
1.5 billlion borrowed p.m. will probably go to 2.5 billion borrowed p.m.

Of course people will work out what they can afford but will they factor in an interest rate increase of 3%? or 5%? Will they remember to apply that increase to ALL their debts (car loan, personal loan etc) ???

TheLedge

Bluehair wrote:

Imho it's a very bad sign. 100% for any ftb?? Thats nuts. Indicates a drop in mortgage applications and resultant demand for ftb 'starter' homes. I wouldn't touch property in Ireland today with a 50foot pole. The market is so overheated it's scary.

agreed. It won't be long now! 2 years. :eek:

MorningStar

jhegarty wrote:

don't forget , its not just spend 2 years saving €20k , but its two years saving €20 while paying rent (which is someone elses mortgage)

Actually rent is payment for a service it doesn't really mater what your landlord does with the money he gets from the risk he is taking.

Where did 2 years come into it?

I think more radical approach to housing needs to be made. The government seem to be parralised between the current homeowners, FTB and the building industry. The FTB are the easiest to ignore because they don't use/have political sway. You need something that doesn't devalue current owners, promotes building and provide affordable housing to FTB. I think the best way is to give incentives to retired people to move out to purpose built intergrated communities. This will get the property stock moving about and hopefully better utalised. THere are a lot of largish 3-5 bed houses near me with only 1 and 2 people living in them. A lot of these people could do with a cash bonus for pensions. The incentives could include a policy to sell to FTB or if too expensive a FTB has to be in the chain.

I really think this a plan that should be considered but I don't know how to get TDs behind it.

Imposter

MorningStar wrote:

You need something that doesn't devalue current owners,

Why? If something is overpriced why should we try to keep it that way?

I think the best way is to give incentives to retired people to move out to purpose built intergrated communities. This will get the property stock moving about and hopefully better utalised. THere are a lot of largish 3-5 bed houses near me with only 1 and 2 people living in them.

That makes no sense. First time buyers, i would imagine, predominantly don't have families (yet). They don't need a 3-5 bed place either. PLus moving people out of their communities is never a good plan imo.

ionapaul

MorningStar is a landlord, it isn't very likely he will support anything that devalues his investment!

CiaranC

I wouldn't touch property in Ireland today with a 50foot pole.

Comments like this really irritate me. What do expect ftbs to do, live in a tent in their parents garden?

Weve been hearing that the property market is about to collapse for about 10 years now, and its never stopped growing in that time.

woody

I tbh would'nt touch it either, so I can buy a house 13 miles from my home town in newry and save a lot of money it is out of control and down to greedy investors and landlord scum, who put decent hard working people out on a limb as they accumilate to much property.


In a nutshell the country is F*cked and thank god i own my own house and I mean I have the deeds and not some evil greedy bank or building society

MorningStar

Imposter wrote:

Why? If something is overpriced why should we try to keep it that way?

BEcause if you devalue property prices nobody wins. People won't sell property, trade or built it. IN other words there would be no where for FTB to buy. A price crash does not help anybody except the rich who can afford to buy the cheap property. If you think FTB will be able to swoop in and get all the bargins I think it is unlikely. THe banks won't give them the money if they find a property and people will be too scared to buy. THe collapse of the property market will never be a good think and would have devastating results on all walks of life. Most importantly in the governments eyes the people it would effect the most have a lot of political power.

The view that property is overpriced is also quite relative. There is a lack of housing so supply is out striped by demand that means they aren't over priced in economic terms. Somepeople have been saying there is property bubble for the last 7-10 years. SO if there is a price drop where do you think it will go back 10 years, just 1?

Imposter wrote:

That makes no sense. First time buyers, i would imagine, predominantly don't have families (yet). They don't need a 3-5 bed place either. PLus moving people out of their communities is never a good plan imo.

What we are currently getting is a donnut effect where older areas are literally dying off. THere are no children for the schools or other services so they are closing down while further out there are no schools. FTB might not all actually have children but they are more likely than a retired couple
The houses that are too big etc... would need to have a FTB involved in a chain to get incentive (making FTB a sought after commodity) . Currently people who want to upsize ca't due to tha lack of housing stock and price by inclusing a FTB in the deal they get the smaller house. THe concern of the communities is a valid point but the idea is that the newly built houses are intergrated communities where there is housing for elderly to young alike to increase community bonds. THe older areas will also get a mix as not all would take the incentive deal. THere would have to be a few rules to prevent abuse and make sure the desired effect happens but the ideas is to use services currently there and create services that we will need in the future.The whole of Ireland is getting older we need retirement facilities to be built
The current housing stock is under used we need to change that along with building new houses

goingmental

I have to say in all honesty, that i was more than a little excited when i heard about the 100% mortgage,,

To be a first time buyer in dublin is a nightmare,, i am on an ok wage(just about livable on !!) and have a loan which i am paying off every month,, on top of that there is rent, i dont have the luxury of living at home and saving rent money every month.
This means that i dont have the option to save for a deposit, am trying to get my loan down so that i can be considered for this 100% so i running in circles..
the one year fixed rate with firstactive seems ok, and then there is always the option of changing your mortgage to another bank once you are in the postion to do so,, (cost of legal fees etc)

so on one hand it is a step in the right direction for us poor wannabe homeowners,,,,,>

MorningStar

ionapaul wrote:

MorningStar is a landlord, it isn't very likely he will support anything that devalues his investment!

True but it doesn't mean I want FTB screwed either. In the time my family have a had property we have left the rent as is as we knew they were saving to buy. We have tenants for years who will never own property, without landlords these people would be on the streets. The whole social welfare system would stop without landlords they provide a vital service. There is actually a need for more landlords willing to deal with the different types of tenants.

woody wrote:

I tbh would'nt touch it either, so I can buy a house 13 miles from my home town in newry and save a lot of money it is out of control and down to greedy investors and landlord scum, who put decent hard working people out on a limb as they accumilate to much property.

Yet you want to get a property at below market value even thought many of landlords paid 54% tax on their income and 19% mortgages. You haven't worked hard compared to that yet you want FTB to pay less than them what's so decent about that? It is a simplistic approach to just make FTB able to buy cheaper or borrow more and an overall move should be made to maybe help more than one issue in the housing market and socail issues IMHO.
Try thinking about the whole picture and not just assume facts about investors and landlords. You aren't exactly giving a show of knowledge there.

As a homeowner would it bother you if house prices fell so FTB could buy property?

garred

woody wrote:

I tbh would'nt touch it either, so I can buy a house 13 miles from my home town in newry and save a lot of money it is out of control and down to greedy investors and landlord scum, who put decent hard working people out on a limb as they accumilate to much property.

A bit much that. I have an investment property with tennants living in it. It was my first property and I borrowed up to my arse to get it and saved. I invested in something for the future (don't have a pension) and I'm now a "landlord scum". These "decent hard working people" you talk about can be landlords aswell.

Imposter

MorningStar wrote:

BEcause if you devalue property prices nobody wins. People won't sell property, trade or built it. IN other words there would be no where for FTB to buy. A price crash does not help anybody except the rich who can afford to buy the cheap property.

So which is it? If there is property for sale why do you think the rich would buy if the market is on a downturn? I reckon first time buyers would be more likely to buy while the market was falling rather than rich people, who I assume would be more intelligent regarding investments, especially considering for a ftb it is a place to live rather than just an investment.

If you think FTB will be able to swoop in and get all the bargins I think it is unlikely. THe banks won't give them the money if they find a property and people will be too scared to buy. THe collapse of the property market will never be a good think and would have devastating results on all walks of life. Most importantly in the governments eyes the people it would effect the most have a lot of political power.

Please explain the bold bit, I don't understand! Who will it affect and what type of devastating result? That government mumbo jumbo means nothing. Most people 'in power' have kids who want to buy a house etc. It affects everyone equally apart from the few who are very rich and are nowhere near numerous enough to keep the government in power, should this become a serious election issue.

As for the banks not loaning them money then I think you are wrong again. The banks will first cut off funding to investors as they will have reduced returns on their investments. Both groups could end up with negatuive equity, but as mentioned already a ftb actually has somewhere to live, whereas an investor has a very risky investment.

The view that property is overpriced is also quite relative. There is a lack of housing so supply is out striped by demand that means they aren't over priced in economic terms. Somepeople have been saying there is property bubble for the last 7-10 years. SO if there is a price drop where do you think it will go back 10 years, just 1?

Sure that is only my opinion but the supply is fast catchnig up on the demand. Surely there ain't an unlimited demand?

Currently people who want to upsize ca't due to tha lack of housing stock and price by inclusing a FTB in the deal they get the smaller house.

This situation only exists because of the mania surrounding 'getting on the ladder'. For the vast majority that is their own fault as they should have thought about what they wanted in a house first time round. If it was left to the small percentage that have had a large change in their financial circumstances, this 'stepping-up' market would be irrelevant.

The current housing stock is under used we need to change that along with building new houses

Again that's a problem for those that bought the houses and noone else. If elderly people wish to cash in on their assets then they can, but trying to force them would be wrong, as would propping up a market that exists largely because of peoples inbuilt greed. Not that that has ever stopped governments before.

lomb

CiaranC wrote:

Comments like this really irritate me. What do expect ftbs to do, live in a tent in their parents garden?

Weve been hearing that the property market is about to collapse for about 10 years now, and its never stopped growing in that time.

there has been a hugh transfer of wealth from the young to the old who own all the property. i expect the parents to consider selling their house and trading down as the kids move out in order to transfer them back the money in the form of significant deposits for their houses. many are doing this as we speak.

bear in mind a fine period house in ranelagh has gone from 120000 irish pounds in 1990 to 4 million euros 15 years later. a house on shrewsbury and ailsebury road have gone up from 150000 to around 10-15 million euros now.

of course period houses in nice areas with long back gardens are very scarce but there is no doubting the shift of wealth, and i dont think property will decline, if u need a house try everything to secure one before it rises another 15-20%.

Bluehair

This is turning into a more interesting thread than I thought it might.

Re: the '50foot pole' comment of mine who precisely wrote the rule that stated you must purchase where you live?? There is plenty of rental property available with the various advantages that brings (yes advantages, people get too excited in this country with the notion they are 'paying someone elses mortgage')

I know of no-one in the last few years who has managed to buy either on their own or without some form of fraud involved (that includeds raising your deposit through the credit union since the bank won't know).

For what it's worth I bought a house 6 years ago which had already almost doubled in value the previous 18 months. I was convinced I'd missed the boom but really liked both the property and the location (seemingly irrelivant factors today) so went ahead with it. It's tripled in value since and I've just sold. I'm renting now and forsee renting for a few years until buying again or emmigrating. I'm very relieved to be out with a profit.

I'll happily go into more detail later but the simple fact is far too many things have to go just right for the market here to continue rising; interest rates, economy (which itself relies on construction), ftbs, net inflow of migrants, world economy etc. etc... Just one problem and the whole deck of cards can come down.

I laugh at the notion that ftb would save a falling property market since houses would become more affordable :rolleyes: , think about it for a minute. You're a ftb, the house you want but couldn't afford at 300k came down in the first 3 months of the year to 280k, 3 months later its 265k, 4 or 5 months later you're told they will take 255k. Would you buy the now 'affordable' house or wait and see how much more it comes down? A falling market falls for a long time because everyone plays the waiting game, look at Japan for an example.

I'm already seeing anecdotale evidence of the above happening, with a friend in Donabate getting 275k for selling his house when next door sold for 285k last year. I'm also hearing complaints from people that their apartment/starter home 'hasn't gone up in value since last year'. As far as I'm concerned the fall is already on our doorstep and measures like 100% mortgages for ftb and no stamp-duty for ftb on second-hand homes are attempting to hold off the inevitable.

But like every market there's always plenty of suckers left until the very end. Don't be one of them.

Thomond Pk

The technical term for this is disaster myopia, given the availability of other lines of credit on higher rates of interest this really is reckless trading by the financial institutions involved.

My advice is take your money off deposit in Ireland stick it into dollar accounts in Ecuador at least that way you will get 7% on your deposits before they collapse.

jhegarty

Everyone here seems to know when the property price crash is coming , if you wouldn’t mind could let give me the exact date of that, so I will be sure to buy now and sell up a week before it….

I presume no one in this country was predicting a crash 2 or 3 years ago…..

lomb

who cares really if the market does decline 20% theoretically, at the end of the day it wont make a hugh difference to any mortgage payment and we all need a roof anyway.
and what if it goes up another 20%?will u b able to afford it then?
to be honest i think certain properties like non city center property(dublin) offer very poor value and are poor rental bets also.
location really is the most important thing, u need schools, shops, uni, and a snob factor beside u,thats why D4, blackrock and that whole belt has gone to the moon pricewise.

lomb

jhegarty wrote:

Everyone here seems to know when the property price crash is coming , if you wouldn’t mind could let give me the exact date of that, so I will be sure to buy now and sell up a week before it….

I presume no one in this country was predicting a crash 2 or 3 years ago…..

stamp duty kills the notion of a fast entry or escape from property. essentially u are in for the long haul if u buy.

garred

Thomond Pk wrote:

My advice is take your money off deposit in Ireland stick it into dollar accounts in Ecuador at least that way you will get 7% on your deposits before they collapse.

Please elaborate

Thomond Pk

That is simply the rate of interest offered on deposits by commercial banks in Ecaudor for 90 day notice accounts. Needless to say the political situation can change in the blink of an eye.

garred

Sweet. I have a mate over there must give him an email.

Bluehair

jhegarty, one of the funniest things about bubbles lasting a long time are those who feels everything is grand since 'The Economist' or the general 'they' have been predicting a crash for years and have been wrong so far, therefore that must mean they are still going to be wrong in the future? An analysis of the background to the property bubble and its ongoing causes has convinced me to get out now. I'm certain I won't be missing out on any significant future gains and am reasonably convinced I've dodged a crash. Either way I'm happy with my decision.

lomb wrote:

who cares really if the market does decline 20% theoretically, at the end of the day it wont make a hugh difference to any mortgage payment and we all need a roof anyway.

The problem is a lot of investors are driving the market and care very much about any decline, if they start dumping then you can watch a steady decline in the market for a decade or more.

Also (and just ask them if you don't believe me) many ftbs are getting caught up in 'starter' home because they feel they don't have any other option and they are convinced they'll be able to trade up to a 'proper' home in a few years time on the back of the equity build-up. If there's any kind of slow-down they'll be trapped there with the gloomy realisation that a 30 or 40 year mortgage doesn't just mean 'affordable' repayments it means you're staying put for a loooong time.

CiaranC

So what do you suggest that FTBs do then bluehair?

I await your enlightened reply with bated breath.

MorningStar

Imposter wrote:

So which is it? If there is property for sale why do you think the rich would buy if the market is on a downturn? I reckon first time buyers would be more likely to buy while the market was falling rather than rich people, who I assume would be more intelligent regarding investments, especially considering for a ftb it is a place to live rather than just an investment.

Investors are like animnals they sense impending disaster and flee and then come back later and buy long term investment. You have very few "proper" investors starting fresh speculation , it' a lot of small investor who aren't rich. FTB don't stand on their own they are only part of the market and they are relying on family money a lot now.

Imposter wrote:

Please explain the bold bit, I don't understand! Who will it affect and what type of devastating result? That government mumbo jumbo means nothing. Most people 'in power' have kids who want to buy a house etc. It affects everyone equally apart from the few who are very rich and are nowhere near numerous enough to keep the government in power, should this become a serious election issue.

Pension funds rely heavily on property. Lifestyle mortgages would suddenly look very bad and spending would slow. If you think I am talking mumbo jumbo about the governement I think you miss what the investors are like. Many are middle class and using property as a pension plan. That is the government they don't bring in rules that harm themselves. THe people who vote in numbers are middle class. They might wan there kids to buy houses but not at the expense of their pensions of inheritance. Negative equity is knopw for it's devastating effect. How would you feel if you mortgage was bigger than you house value?

Imposter wrote:

As for the banks not loaning them money then I think you are wrong again. The banks will first cut off funding to investors as they will have reduced returns on their investments. Both groups could end up with negatuive equity, but as mentioned already a ftb actually has somewhere to live, whereas an investor has a very risky investment.
Sure that is only my opinion but the supply is fast catchnig up on the demand. Surely there ain't an unlimited demand?

You might think I am wrong but what are you basing it on? The property bubble in the UK reacted very like I described. FTB get scared off when their friends all end up in negative equity so they rent and rent actually went up!

Imposter wrote:

This situation only exists because of the mania surrounding 'getting on the ladder'. For the vast majority that is their own fault as they should have thought about what they wanted in a house first time round. If it was left to the small percentage that have had a large change in their financial circumstances, this 'stepping-up' market would be irrelevant.

THe step-up market is critical because the market has gone up so much. People baought waht they could afford at the time and now that they are older have different needs they need to extend or up size. THe "mani" is a logical and proved point about getting on the market. I don't think you can call it mania if is so well proved to be the best way to get the house you want. It's a calculated risk for an objective. THe irish property market was very simply buy and then live there forever, it is now more complex

Imposter wrote:

Again that's a problem for those that bought the houses and noone else. If elderly people wish to cash in on their assets then they can, but trying to force them would be wrong, as would propping up a market that exists largely because of peoples inbuilt greed. Not that that has ever stopped governments before.

I think you are missing the point. If last time FTB upgrades there will be more property suitable for FTB. Retired people are all elderly as such but there is a huge shortfall in pensions so to encourage them to downsize and invest the cash into their pensions will actually save the country money and improve theri lives. By tying in FTB you get a double benifit. Under used housing is a problem to all because we are living in an even worsening urban sprawl. I have an underused house and it isn't a problem to me it's a problem for the services that now accomodate the people who could live in my house but have to live further out. FTB also don't realise family care can destroy finances later in life when the parents get old. Alot of small landlords are renting out parents homes to pay for care these are the landlord scum many people talk of
I have been looking at the property market all my life due to family concerns It doesn't mean I am an expert but it does mean I remember how we got here myself as opposed to newspaper articles. I don't know what you are basing your speculation on but it is all speculation. THe best anybody can do is look at what has happened before. I don't think what you have siad matches history but I will gladdy change my mind if there is evidence or logic.

Zaph0d

MorningStar wrote:

BEcause if you devalue property prices nobody wins. People won't sell property, trade or built it. IN other words there would be no where for FTB to buy. A price crash does not help anybody except the rich who can afford to buy the cheap property. If you think FTB will be able to swoop in and get all the bargins I think it is unlikely. THe banks won't give them the money if they find a property and people will be too scared to buy. THe collapse of the property market will never be a good think and would have devastating results on all walks of life.

This is the view that inflation is a good thing. However, when goods are cheaper, consumers gain.

FTBs have to borrow substantially less money so they have lower repayments, leaving more cash to spend on the rest of their lives.

Houseowners don't lose out in a crash because their repayments remain the same and when they go to move they find that other properties have dropped in value proportionate to the paper loss on their own houses.

So that leaves property investors. Yup, they lose. Boo hoo.

Check out this picture of Mount Fuji:

woody

garred wrote:

A bit much that. I have an investment property with tennants living in it. It was my first property and I borrowed up to my arse to get it and saved. I invested in something for the future (don't have a pension) and I'm now a "landlord scum". These "decent hard working people" you talk about can be landlords aswell.

The reason why property prices are so high is because of landlords and investors that is an actual fact, what right have you or anyone else got to have two houses. Why should we rent, why should families be on the breadline and up to there eyes in debt because a few thousand investors helped ramp up the price of houses..

I thought the British Landlords went in 1922, just to be replaced by greedier Irish ones.

How can you class yourself as hard working, when you sit back and let people with no choice pay over the odds rent, your mortgage and build up your bank balance on their back, I'd say our four fathers are turning in theirs graves over there lovely republic becoming a greedy capitalist state.

I dispise investors on the grounds of what they do to FTB, real people who work hard to get a house.

People with two houses or more should be heavily taxed to the extent that it makes it impossible for them to make a PROFIT..Invest your money elsewhere and lets get the debt and prices decreased in the country before the banks own the whole island.

Bluehair

CiaranC wrote:

So what do you suggest that FTBs do then bluehair?

I await your enlightened reply with bated breath.

We're crossing debates here with a few others but anyway....

Who said you have to buy ?

This really isn't rocket science. Why are people buying younger and younger today? Two main reasons;

1./Because they feel if they don't buy now they'll never be able to afford to (which is economic nonsense, the market will supply at what the market can afford)
2./They are being told they can sell their 'starter' home on in a few years to some other ftb and cash in on the equity increase to trade up.

There is no way in hell I'd be crippling myself with debt today to buy poorly built houses in bad areas.

My advice to ftbs? Simply wait. Rent somewhere you'd like to live and enjoy it. You've missed out on the boom and have nothing to gain by getting on board the market right now (even the most biased newspapers are talking up a 'soft landing', i.e. no more double digit gains and more like 3% a year, I can get that on deposit in Rabobank)

And if you're lucky.... you'll avoid the worst property crash this country has ever seen and the resultant reccession.

garred

woody wrote:

The reason why property prices are so high is because of landlords and investors that is an actual fact, what right have you or anyone else got to have two houses. Why should we rent, why should families be on the breadline and up to there eyes in debt because a few thousand investors helped ramp up the price of houses..

I thought the British Landlords went in 1922, just to be replaced by greedier Irish ones.

How can you class yourself as hard working, when you sit back and let people with no choice pay over the odds rent, your mortgage and build up your bank balance on their back, I'd say our four fathers are turning in theirs graves over there lovely republic becoming a greedy capitalist state.

I dispise investors on the grounds of what they do to FTB, real people who work hard to get a house.

People with two houses or more should be heavily taxed to the extent that it makes it impossible for them to make a PROFIT..Invest your money elsewhere and lets get the debt and prices decreased in the country before the banks own the whole island.

What the hell are you on. You go on as if landlords/investors are some sort of different breed/race. I invested my money, as many people do whether it be in stocks, shares, pensions, etc. It just so happens that I picked property because I saw the potential and it's paid off. Forgive me for being naive but I thought the idea of an investment was for it to gain in value. Anyway technically the bank owns the house, not me, not yet.

What are you going on about "the real people" and "normal hard working". Like I said, I borrowed, saved and invested with someone else in order to get my first property. I work hard in my 9-5 for my wage and my investment is a side issue. Who do you think you are judging someone just because they have a second property.

Why do you rent. I'll tell you why, because the property has been rising for ever and its just the last 10 years it boomed and you did'nt get on the ladder. You probably said, as most people are now, that prices will fall. Bottom line if you want to buy a house just do it and stop moaning and complaining about people who have done so, seen the potential, and bought a second, maybe a third. Save and borrow like everyone had to and then you can own a property.

An investment is an investment. The whole gamble is that it will go up and it has. So don't let sour grapes cloud your judgement. Go and buy if you want a property, don't moan about other people who have.

Imposter

MorningStar,
You sound very much like another Irish guy that was talking at me last weekend. Irish people are obsessed with property. The mania is real. You say it is neccessary but I dissagree.

These Lifestyle mortgages you speak of are hardly a good idea. It defies logic how anyone can think they are a good idea. Banks are hugely to blame for this too. People spending more than they earn (or at least have in safe/guaranteed/hard cash) is crazy.

I live in a country where people earn less than in Ireland. They pay more tax, a lot more (percentage wise) don't own their own homes, yet the standard of living is so much higher. Property is pretty expensive but affordable, unlike in Ireland. A lot of the reason for this is also that rent is less than any mortgage. There is no mania as houses devalue (or at least don't substantially rise in value) with age. Nobody wets their pants with excitement at the thoughts of owning (in 30 years!) a shoebox over an hour from where they work.

Thomond Pk

Woody no disrespect but it is up to the government to regulate the market and if the system is such that it is favourable to invest in residential property then why not do it if you have funds to invest?

The problem is not that landlords are bad but there are three problems in the sector.

1> The tax incentives on offer were not location specific enough to keep investment where it provided significant societal benefits, believe this or not but some properties on Haddington Road in Dublin 4's Ballsbridge area once had section 23 tax relief.

2> The government did not put the necessary investment into the supply side of the equation i.e providing water and public transport infrastructure and social infrastructure such as schools etc. This has led to a tri-market split of housing served to European norms which is priced off the scale. Secondly edge-city/ commuter town sprawl which is expensive and yields little or no quality of life, Thirdly one-off houses which exacerbate the problem still further and for this market there are little or no investors willing to touch.

The third problem are sham landlords such as David Grant highlighted on primetime, the problem here is not the regulations it is the absolute absence of any enforcement whatsoever.

MorningStar

Zaph0d wrote:

This is the view that inflation is a good thing. However, when goods are cheaper, consumers gain.

No it the economic reality of what happens in a price crash. Investors are the least likely to loos in a sudden crash as they speculate on risj. FTB are the people to most likely have a large (100% mortgage thread don't forget) on a property not worth that.

woody wrote:

The reason why property prices are so high is because of landlords and investors that is an actual fact, what right have you or anyone else got to have two houses. Why should we rent, why should families be on the breadline and up to there eyes in debt because a few thousand investors helped ramp up the price of houses.

Speculation on your part based on an obvious dislike of landlords and absence of any facts. Many of these lanlords are renting parents houses out to pay for the care as I have stated. THere are many FTB investors who live at home and rent out the house untill they can afford to live in it. People rent because they can't afford a property and or don't want to buy where they rent. Some people also prefer to rent because there are actual benifits. What you described as landlord and renter is limited and doesn't sound based in reality from my years of renting and observing the property market.

The reason house prices are high is a young population hitting settling down age and a high home owneship IMHO but it's based on these facts not blind hatered

http://www.nationmaster.com/graph-T/peo_hom_own

http://www.nationmaster.com/graph-T/peo_hou_wit_mor_tha_5_peo

http://www.cso.ie/statistics/popnbyage2002.htm

Imposter

Not sure how much you know about the country but home ownsership in ireland has a long historical background. You also need to know our tax history and economic history to understand what happens now. We had the highest direct tax in Europe for a long time and we also had mass emigration and people were paid small wages. I don't know where you are from but in ten years after a huge economic growth you might find your country transforms a lot.When the economy picked up the population that had been moving away stayed and wanted houses there aren't/weren't enough house prices went up. Now to keep our economy going we can't risk a huge employer like the building industry the politicains are afriad to annoy the voting puplic which isn't FTB.

We reduced or taxes to stimulate growth and it worked a bit too well.

Where are you from then? I might be able to relate the social impacts we have experienced in the last 20-15 years. The standard of living in Ireland has increased so much in my life time it's hard to describe so it really depends where you are coming from.

Imposter

MorningStar wrote:

Not sure how much you know about the country

I know quite a bit. I'm irish. I just don't live there.

I don't know where you are from but in ten years after a huge economic growth you might find your country transforms a lot.

Unlikely, Austria's already pretty far down that road.

When the economy picked up the population that had been moving away stayed and wanted houses there aren't/weren't enough house prices went up. Now to keep our economy going we can't risk a huge employer like the building industry the politicains are afriad to annoy the voting puplic which isn't FTB.

I think you'll find the house prices went up when everyone started moving to Dublin. Yes it was because Dublin got most of the major foreign investment and as a result most of the good jobs were there. If that had been spread more evenly around the country there's a chance we wouldn't have seen such high rises in property values and strain on resources.

The building industry is too big at the moment. As you've already said we're playing catch-up on the supply and demand side of things. Logically that has to slow down and/or reverse eventually.

We reduced or taxes to stimulate growth and it worked a bit too well.

And now we can't rise interest rates to curb inflation either!

The standard of living in Ireland has increased so much in my life time it's hard to describe so it really depends where you are coming from.

I actually don't agree with that either. People are earning more yes, but life is much more expensive. Quality of life is not entirely about money. It is about the life you have and how happy you are with it. Having to travel over one hour each way to work reduces your quality of life. Doing so under stressful conditions reduces your quality of life. Having to work all the hours possible to pander to some idiot of a boss who extects it, reduces your quality of life. If you are one of the lucky ones that gets paid overtime, having to work all possible hours just to afford your life (car, mortgage etc) reduces your quality of life. I could go on but I guess you understand what i'm getting at.

dublinguy2004

lomb wrote:

there has been a hugh transfer of wealth from the young to the old who own all the property. i expect the parents to consider selling their house and trading down as the kids move out in order to transfer them back the money in the form of significant deposits for their houses. many are doing this as we speak.

bear in mind a fine period house in ranelagh has gone from 120000 irish pounds in 1990 to 4 million euros 15 years later. a house on shrewsbury and ailsebury road have gone up from 150000 to around 10-15 million euros now.

of course period houses in nice areas with long back gardens are very scarce but there is no doubting the shift of wealth, and i dont think property will decline, if u need a house try everything to secure one before it rises another 15-20%.

While agreeing when you say that there has been a huge transfer of wealth to the middle-aged in our population, I disagree with you when you say that you 'expect the parents to consider selling their house and trading down as the kids move out in order to transfer them back the money in the form of significant deposits for their houses'.

This is a ridiculous statement. People who have worked hard all their lives to live a modest suburban house are entitled to do so. Whether such a house is deemed to be excessive to their needs (in your view) is nobody's business and irrelevant. If a single law-abiding, tax-paying bachelor wants to live in a Merrion Square town house all by himself, he's entitled to do so. Is this not a free country?

I as a 24 year old, would never (on a point of principle) go crawling to my parents expecting them to fork up for a deposit for my mortgage or sign them into an equity agreement. Besides, this kind of activity actually raises house prices further and gets people further into debt. And yes, it is tough to own any kind of property that's not in the grid-locked, commuter-land that is west Dublin. Life is tough and it wasn't very long ago (1980s) that people paid 50% tax and 19% mortgage interest rates.

It would be nice if every tax-paying person had a steady suburban life that was once a modest ambition and is now but a pipe-dream for many young people. In this sense, yes, the goal posts have changed but you must bear in mind that we are living in a booming economy. While housing and the cost of living may be very expensive in a booming economy, there is huge opportunity for the entrepeneur in these kinds of economic conditions to rise above your generic 9-5 office worker who commutes 2 hours a day to his rented flat.

The approach I take to living in Dublin is that you must think creatively and beyond your next pay check to have a realistic chance of buying a half-decent property. Marrying someone is another way so as to have two incomes paying in tandem. Otherwise, the only option for your average first time buyer from a middle class family is to pay rent (rather low at present) and take the risk of sitting out the boom whilst saving at the same time. I guess you could also up and leave this country and ride another wave abroad. This is what I'm considering doing when I finish college this Septemer as I'm not i) convinced that the Irish economy is sustainable and ii) I just cannot bring myself to living in Lucan or Celbridge or somewhere!

dublinguy2004

woody wrote:

The reason why property prices are so high is because of landlords and investors that is an actual fact, what right have you or anyone else got to have two houses. Why should we rent, why should families be on the breadline and up to there eyes in debt because a few thousand investors helped ramp up the price of houses..

I thought the British Landlords went in 1922, just to be replaced by greedier Irish ones.

How can you class yourself as hard working, when you sit back and let people with no choice pay over the odds rent, your mortgage and build up your bank balance on their back, I'd say our four fathers are turning in theirs graves over there lovely republic becoming a greedy capitalist state.

I dispise investors on the grounds of what they do to FTB, real people who work hard to get a house.

People with two houses or more should be heavily taxed to the extent that it makes it impossible for them to make a PROFIT..Invest your money elsewhere and lets get the debt and prices decreased in the country before the banks own the whole island.

mmm. Ok whatever about all the stuff about the republic and capitalist states and all that, I agree somewhat about property tax on homes.

I'm not sure about taxing peoples primary homes (as is effectively done in the UK in the form of council tax based on a percentage of the property's market value), because one has to remember that a man's home is his castle. I would however give thought to the prospect that those who own second homes should be taxed accordingly. A modest tax may be appropriate to allow for a fairer balancing of available housing but I cannot see it happening because there is a huge interest in property by the elite in Ireland. I guess landlords who rent out their second homes already pay enough tax, so a property tax may not go down too well politically.

Overall, I can't see property tax being introduced although I do forsee council taxes being imposed in Ireland. Presently we pay bin charges and I reckon it's only a matter of time before water charges and such like are imposed by the ever-powerful local authorities which will effectively mean property taxation.

Bluehair

Imposter wrote:

People are earning more yes, but life is much more expensive. Quality of life is not entirely about money.

Kudos to Imposter for hitting the nail on the head. No longer do people care about these things it's simply a matter of 'can I afford it?' and 'sure I can trade up in a few years to what I really want'.

If anything quality of life in this country is steadily going down for the majority and I do not consider using easy credit to buy now pay later any kind of contribution to quality of life.

I for one do not want to pay a quarter million for some poorly built 2 bed 'starter' home in what I consider will be the slums of the future. It's pure insanity and obvious to anyone who looks around the entire market can see that vested interests are driving the whole thing.

Do you think First Active are offering 100% mortgages for a laugh? Or perhaps because they feel sorry for ftbs? :rolleyes: It's because there's a clear drop-off in new mortgage applications and they need to do something to sustain interest.

Why did the government drop stamp duty on second hand homes to ftbs this year? They felt sorry for them? They didn't consider the considerable tax revenue they would forego? No, the government more than anyone realised just how reliant on construction the economy has become and just how close to the brink it is, anything they can do to sustain the situation they will do.

The signs are all there folks all you have to do is take the blinkers off long enough to read them.

MorningStar

Imposter wrote:

I know quite a bit. I'm irish. I just don't live there.
Unlikely, Austria's already pretty far down that road.

Austria was no where near as poor as Ireland was and maybe I don't know what's goin on there now but I doubt it is moving anywhere close to the speed ireland has and is.

Imposter wrote:

I think you'll find the house prices went up when everyone started moving to Dublin. Yes it was because Dublin got most of the major foreign investment and as a result most of the good jobs were there. If that had been spread more evenly around the country there's a chance we wouldn't have seen such high rises in property values and strain on resources.

House prices all over have gone up but Dublin has had more due to direct investment as said. The truth is Ireland's population has gone up due to the lack of emegration. So many moved to Dublin still doesn't negate the supply demand element. of the Irish market as a whole.

Imposter wrote:

The building industry is too big at the moment. As you've already said we're playing catch-up on the supply and demand side of things. Logically that has to slow down and/or reverse eventually.
And now we can't rise interest rates to curb inflation either!

It may be too big but it can't match demand so maybe it isn't too big. That's why I advocate better use of existing stock rather than new builds. Lociaclly it won't reverse as the property market needs to accomadate the ever increasing population. The projections are pretty frightening. A controled slow down is what I am advocating and a spreading of the money outside the building industry .

Imposter wrote:

I actually don't agree with that either. People are earning more yes, but life is much more expensive. Quality of life is not entirely about money. It is about the life you have and how happy you are with it. Having to travel over one hour each way to work reduces your quality of life. Doing so under stressful conditions reduces your quality of life. Having to work all the hours possible to pander to some idiot of a boss who extects it, reduces your quality of life. If you are one of the lucky ones that gets paid overtime, having to work all possible hours just to afford your life (car, mortgage etc) reduces your quality of life. I could go on but I guess you understand what i'm getting at.

It really depends on what you remember. There were people without shoes
and clothes. The mass unemployment and huge herone problems. People seem to have a problem with the fact they are working and that the commute is not as easy everywhere. An hour travel would be a luxury for many now but after living in London that is alow travel time . I agree it is poor service but quality of life has improved to many people. To say that the quality of life has not improved because people jobs are not as well catered for as in other countries misses my point. People have jobs, food and roof over there head (they don't need to own it). That is an improved quality of life from 40 years ago and 30 and 20. Where people were once poor and unable to eat they now have big screen TVs and dvd players. There are still problems but you can't expect a third world country to suddenly get up to speed with everywhere else. you can blame planing but everybody was caought off gaurd with Ireland's economy

http://www.nationmaster.com/graph-T/mor_int_sel_by_oth_and_uns_fir_dis_cap

That doesn't sound like a good quality of life being the country that kills the most people.