Property Market 2016

draiochtanois · 10-10-2016 4:47pm

This post has been deleted.

Zzippy · 10-10-2016 6:57pm

The_Conductor wrote: »

The hold up in builders ramping up construction- is not whether (or not) they're making a profit- its whether they can finance the construction of developments or not. At present the only finance available to developers is at extortionate rates (of between 15 and 20%)- lending institutions do not want to lend for property construction- come hell or high water.

If the government wanted to ungum the situation- they would come up with a lending scheme for developers- perhaps taking an equity stake in developments which they could release as the principal on the loans was repaid.

Is that accurate? It's incredibly high, higher than overdraft and equivalent to credit card rates!

riclad · 10-10-2016 7:43pm

One example ,if you drive down the river road ,finglas ,theres, loads of empty land ,sites on both sides of the road.
Theres a few apartment blocks on that route .
But There,s space there for 1000,s of houses to be built ,
and it would be easy to install water and esb connections in that area .or Look at all the empty space between blanchardstown and cabra .People would buy houses there if the price was right .
i.D Agree the problem is a lack of finance eg builders should be able to borrow at 10 per cent .

ThisRegard · 10-10-2016 7:57pm

Ramming in houses where there's any bit of green space is not the answer either.

Gandalph · 10-10-2016 8:19pm

Zzippy wrote: »

Is that accurate? It's incredibly high, higher than overdraft and equivalent to credit card rates!

Nah mezz finance would even cost that (none that I've seen anyway, could be some cowboys out there trying to flog those rates though).

Even with financing it's hard to turn a decent profit in this market. Land values combined with the VAT on new builds is a killer. Houses are not exactly flying out the door in the GDA, even new builds. The banks have no problem financing central mid size developments from reputable developers, it's not very expensive either.

The_Conductor · 11-10-2016 5:43am

Zzippy wrote: »

Is that accurate? It's incredibly high, higher than overdraft and equivalent to credit card rates!

Its not quite credit card rates- but were you or I to walk into any high street branch of BOI/AIB (or any of the others) and ask for a personal loan for a car- we'd probably be quoted 11-12% (yes- they do actually get away with this high!). A developer on the other hand depending on the project could be 16/17/18/19/20%.........

CIF did a study released about 6-7 months ago- which showed that finance now accounts for up to 40% of the construction cost of a property.

Lack of finance- is gumming up the works- however the government want to deal with it- taking equity stakes in individual properties if they like, or whatever- they need to ungum the bottleneck.

I feel dirty beating a drum fighting developer's corner- this though is the one, unhighlighted, bottleneck- that has the potential, as part of an overall solution, to make a big difference, that no-one seems to be talking about.

I'm actually baffled how or why its not getting air-time...........

Shedite27 · 11-10-2016 8:11am

The_Conductor wrote: »

Its not quite credit card rates- but were you or I to walk into any high street branch of BOI/AIB (or any of the others) and ask for a personal loan for a car- we'd probably be quoted 11-12% (yes- they do actually get away with this high!). A developer on the other hand depending on the project could be 16/17/18/19/20%.........

CIF did a study released about 6-7 months ago- which showed that finance now accounts for up to 40% of the construction cost of a property.

Any idea why? With negative interest rates it's in bank's interest to not hold money. Any money lent at any rate is bonus territory for them. Or is it a follow on "revenge" at the developers for all the defaults over the past decade?

Bob24 · 11-10-2016 8:53am

The_Conductor wrote: »

Its not quite credit card rates- but were you or I to walk into any high street branch of BOI/AIB (or any of the others) and ask for a personal loan for a car- we'd probably be quoted 11-12% (yes- they do actually get away with this high!). A developer on the other hand depending on the project could be 16/17/18/19/20%.........

CIF did a study released about 6-7 months ago- which showed that finance now accounts for up to 40% of the construction cost of a property.

Lack of finance- is gumming up the works- however the government want to deal with it- taking equity stakes in individual properties if they like, or whatever- they need to ungum the bottleneck.

I feel dirty beating a drum fighting developer's corner- this though is the one, unhighlighted, bottleneck- that has the potential, as part of an overall solution, to make a big difference, that no-one seems to be talking about.

I'm actually baffled how or why its not getting air-time...........

Those are interesting and surprising (to me) figures.

I think more of this is needed to address the crisis. If we could have clear view of lets say for a 400k apartment sold in Dublin, what is the cost of land, the cost in taxes, the cost of labour, the cost of parts and equipment, the cost of financing, margins, etc ... it would be easier to pinpoint what is inflating costs and preventing developers from building/selling at prices which fit within the Central Bank's macro-prudential rules for a good number of households.

Zzippy · 11-10-2016 9:28am

The_Conductor wrote: »

Its not quite credit card rates- but were you or I to walk into any high street branch of BOI/AIB (or any of the others) and ask for a personal loan for a car- we'd probably be quoted 11-12% (yes- they do actually get away with this high!). A developer on the other hand depending on the project could be 16/17/18/19/20%.........

CIF did a study released about 6-7 months ago- which showed that finance now accounts for up to 40% of the construction cost of a property.

Lack of finance- is gumming up the works- however the government want to deal with it- taking equity stakes in individual properties if they like, or whatever- they need to ungum the bottleneck.

I feel dirty beating a drum fighting developer's corner- this though is the one, unhighlighted, bottleneck- that has the potential, as part of an overall solution, to make a big difference, that no-one seems to be talking about.

I'm actually baffled how or why its not getting air-time...........

I had heard that banks were reluctant to lend large sums, and were now lending piecemeal i.e. lend enough to part complete and sell some houses, lend the rest to complete the development once sales pay for first lot. I certainly hadn't heard of interest rates that high...
Even at 15-20%, it's hard to understand how that could eat up 30-40% of the cost of a house. I can't see developers drawing down finance and then taking 2 years to build when interest rates are that high. I'd take anything from the CIF with a pinch of salt...

sweetie · 11-10-2016 9:32am

Zzippy wrote: »

I had heard that banks were reluctant to lend large sums, and were now lending piecemeal i.e. lend enough to part complete and sell some houses, lend the rest to complete the development once sales pay for first lot. I certainly hadn't heard of interest rates that high...
Even at 15-20%, it's hard to understand how that could eat up 30-40% of the cost of a house. I can't see developers drawing down finance and then taking 2 years to build when interest rates are that high. I'd take anything from the CIF with a pinch of salt...

It's like the banks want house prices to rise! Oh wait....

draiochtanois · 11-10-2016 10:10am

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keane2097 · 11-10-2016 10:12am

draiochtanois wrote: »

This post has been deleted.

That and perverse incentives.

cruhoortwunk · 11-10-2016 10:22am

What effect will the FTB grant on second hand houses? I know it will push up prices of new builds, but will that have as much effect on second hand houses?
Will the fact that new builds cost more mean that more people opt for second hand, thus pushing their prices up too?

draiochtanois · 11-10-2016 10:23am

This post has been deleted.

Gandalph · 11-10-2016 10:59am

The_Conductor wrote: »

A developer on the other hand depending on the project could be 16/17/18/19/20%.........

CIF did a study released about 6-7 months ago- which showed that finance now accounts for up to 40% of the construction cost of a property.

You would need interest rates to be up at 60-70% for finance to make up 40% of your average house construction cost so that's ludicrous.

Most reports or media coverage of the construction industry is absolute garbage, I wouldn't really pay any heed to them.

bittihuduga · 11-10-2016 11:36am

3 new estates launching this weekend - hope they dont increase the prices depending on the grant (if any) from government:
Tully Hall, Adasmtown and Barnwell

OfflerCrocGod · 11-10-2016 12:36pm

Grant details http://www.rte.ie/news/budget-2017/2016/1011/823164-help-to-buy-scheme-launched-for-first-time-buyers/

jay0109 · 11-10-2016 12:37pm

OfflerCrocGod wrote: »

Grant details http://www.rte.ie/news/budget-2017/2016/1011/823164-help-to-buy-scheme-launched-for-first-time-buyers/

Fill yer boots

yogicolly · 11-10-2016 12:40pm

any idea how this rebate will be received for buyers since July 19th? Luckily bought new home for 270K recently and appear to qualify so just curious how this will be paid to people in similar situations. Cheers

Villa05 · 11-10-2016 12:44pm

OfflerCrocGod wrote:

Grant details

Mortgage must be 80% or higher LTV
The prudent need not apply!

Barnavave · 11-10-2016 12:52pm

bittihuduga wrote: »

3 new estates launching this weekend - hope they dont increase the prices depending on the grant (if any) from government:
Tully Hall, Adasmtown and Barnwell

You can add €20k to any of the above homes as of today.

Utah · 11-10-2016 1:01pm

I think I fall into the small number it will benefit!

whiskeyman · 11-10-2016 1:10pm

It's great for those who have already bought and can avail of the grant, and not incur any potential increase in price.

Michael D Not Higgins · 11-10-2016 1:15pm

The only way I can see it having an impact is if the banks are more likely to grant exceptions to these new build first time buyers. Even if that happens, it just lowers the bank's capacity to grant exceptions elsewhere.

The FTBs aren't going to have more money up front to affect the price they pay, not to mention that new build houses aren't auctioned, they're fixed price.

REFLINE1 · 11-10-2016 1:24pm

yes but it brings a w

Michael D Not Higgins wrote: »

The only way I can see it having an impact is if the banks are more likely to grant exceptions to these new build first time buyers. Even if that happens, it just lowers the bank's capacity to grant exceptions elsewhere.

The FTBs aren't going to have more money up front to affect the price they pay, not to mention that new build houses aren't auctioned, they're fixed price.

It odes bring a new group of of people who would have been still saving , or competing for an exemption into the market as now they have there deposit topped up by 20K.

Bob24 · 11-10-2016 1:25pm

Villa05 wrote: »

Mortgage must be 80% or higher LTV
The prudent need not apply!

This is outrageous.
Banks will be happy though - this will encourage people to borrow with higher LTV , meaning longer repayments and higher interest rates --> more profit for the bank.

ThisRegard · 11-10-2016 1:26pm

REFLINE1 wrote: »

It odes bring a new group of of people who would have been still saving , or competing for an exemption into the market as now they have there deposit topped up by 20K.

How?

seamus · 11-10-2016 1:28pm

The banks have some flexibility in granting exemptions from the deposit rules.

Since the 5% is effectively "guaranteed" income for a FTB, they may factor that into their calculations and offer 92-95% LTV mortgages for FTBs on new builds.

Of course, this won't make new builds more affordable for FTBs, it'll simply push up the prices of new builds by 2-5%.

cruhoortwunk · 11-10-2016 1:29pm

Villa05 wrote: »

Mortgage must be 80% or higher LTV
The prudent need not apply!

Could you not hold aside your extra deposit cash, commit to the 80% mortgage (and get the grant), then pay off the mortgage earlier with the extra ca$H?

REFLINE1 · 11-10-2016 1:30pm

ThisRegard wrote: »

REFLINE1 wrote: »

It odes bring a new group of of people who would have been still saving , or competing for an exemption into the market as now they have there deposit topped up by 20K.

How?

As i understand it this rebate will be added to someones deposit requirement. So if a couple for example were 15-20 k shy of the deposit requirment for 400k house, and were saving away to get there, or were looking to be exempt of the LTV criteria, they now no longer need this exemption or to continue saving for another year.

Bob24 · 11-10-2016 1:35pm

cruhoortwunk wrote: »

Could you not hold aside your extra deposit cash, commit to the 80% mortgage (and get the grant), then pay off the mortgage earlier with the extra ca$H?

That's what I though as well I can think of 2 potential problems:
- A higher LTV in the beginning means you will get a higher interest rate for the whole duration of our mortgage
- If you push the LTV too much the bank might not offer you a loan

cruhoortwunk · 11-10-2016 1:46pm

Bob24 wrote: »

That's what I though as well be you have 2 problems:
- A higher LTV in the beginning means you will get a higher interest rate for the whole duration of our mortgage
- If you push the LTV too much the bank might not offer you a loan anymore

Higher interest rate, but shorter term as you pay it off earlier with excess cash, so possibly not that bad. Worth it to get the €20k relief surely

68 lost souls · 11-10-2016 1:59pm

Bob24 wrote: »

That's what I though as well I can think of 2 potential problems:
- A higher LTV in the beginning means you will get a higher interest rate for the whole duration of our mortgage
- If you push the LTV too much the bank might not offer you a loan

Unless adjust it. I know people that have recently paid off the difference between say 80 and 75% then rang the bank and got a lower interest rat ebased off the 75% LTV.

Michael D Not Higgins · 11-10-2016 2:00pm

REFLINE1 wrote: »

As i understand it this rebate will be added to someones deposit requirement.

Missed this first time around (I think the page I was reading has been updated with this information now). This just lowers the amount someone has to save. The LTI and LTV are still in place.

Many people have been arguing with the rules insofar as they cannot save the required deposit in a reasonable amount of time but their income level would sufficiently cover a mortgage.

If we imagine a case of someone trying to buy a 270k property, they need a minimum deposit as a FTB of 32k. If 13.5k of a rebate is covering part of the deposit, then they only need to save 18.5k. That could be the difference between buying a house this year and having to wait two to three years for some people.

In the worst effect, the developers will see an extra 5% to squeeze out of FTBs. How the government will stop the construction industry profiteering is the real question.

Bob24 · 11-10-2016 2:01pm

cruhoortwunk wrote: »

Higher interest rate, but shorter term as you pay it off earlier with excess cash, so possibly not that bad. Worth it to get the €20k relief surely

True, more paperwork but possibly beneficial financially (really depends on how much the interested rate is increasing and how much you are borrowing).

Also, many banks have 80% as a threshold for higher rates, I am wondering if it will be possible to get both the grant ad the lower rate.

For example if I look at AIB their rate bracket is LTV >50% <=80%.

To get the grant you need an LTV of at least 80%, and to get that rate you need an LTV of maximum 80%; so technically you can get both only if your LTV is exactly 80%. Is that doable in practice?

Wesser · 11-10-2016 2:12pm

Can someone please confirm .... Does this apply to new builds only? I just want to check Im correct no nasty answers please.

So surely that exempts the majority of FTB.

Michael D Not Higgins · 11-10-2016 2:16pm

Wesser wrote: »

Can someone please confirm .... Does this apply to new builds only? I just want to check Im correct no nasty answers please.

So surely that exempts the majority of FTB.

Yes new builds only.

Utah · 11-10-2016 2:17pm

New builds and self builds

derekbro · 11-10-2016 2:20pm

Is the max 20,000 per property, i.e. 10,000 per person for a couple?

Utah · 11-10-2016 2:20pm

derekbro wrote: »

Is the max 20,000 per property, i.e. 10,000 per person for a couple?

Wondering this too, how will it be split?

Michael D Not Higgins · 11-10-2016 2:21pm

In other news, the rent a room scheme limit has been increased from 12k per year to 14k.

OfflerCrocGod · 11-10-2016 2:28pm

Villa05 wrote: »

Mortgage must be 80% or higher LTV
The prudent need not apply!

The truly prudent wouldn't pour all their savings into a deposit. The truly prudent would put 20% down as deposit and keep the rest of their savings in liquid form.

This would allow them to get the lower interest rates, keep a large sum of money as savings and to avail of this grant.

derekbro · 11-10-2016 2:28pm

Will the rent a room exemption going up to 14k not just cause existing landlords using this to up the rent?

asteroids over berlin · 11-10-2016 2:30pm

derekbro wrote: »

Is the max 20,000 per property, i.e. 10,000 per person for a couple?

Yes 20k per property

Michael D Not Higgins · 11-10-2016 2:33pm

derekbro wrote: »

Will the rent a room exemption going up to 14k not just cause existing landlords using this to up the rent?

Probably more likely to rent a second bedroom in most cases. Looking at daft for Dublin, over 60% of sharing ads are below 600/month.

asteroids over berlin · 11-10-2016 2:33pm

i find it laughable, new builds will go up in price! The lads sitting around the table with their tea and biccies and this is the best they can come up with. fcuk wits!

radharc · 11-10-2016 2:45pm

asteroids over berlin wrote: »

i find it laughable, new builds will go up in price! The lads sitting around the table with their tea and biccies and this is the best they can come up with. fcuk wits!

Everyone is looking at this the wrong way, this is a supply initiative, nothing to do with the demand side. The government obviously know developers will stick the 5% onto asking prices but are happy for them to do so if it makes them more likely to build new houses. It is basically a 5% grant from the government to house builders to encourage them to step up activity.

ThisRegard · 11-10-2016 2:48pm

Utah wrote: »

Wondering this too, how will it be split?

Probably deducted the same way mortgage interest relief is done, the bank deducts it from your repayments.

jay0109 · 11-10-2016 3:23pm

radharc wrote: »

Everyone is looking at this the wrong way, this is a supply initiative, nothing to do with the demand side. The government obviously know developers will stick the 5% onto asking prices but are happy for them to do so if it makes them more likely to build new houses. It is basically a 5% grant from the government to house builders to encourage them to step up activity.

No, I think most people fully understand how this will work

Villa05 · 11-10-2016 4:53pm

OfflerCrocGod wrote:

The truly prudent wouldn't pour all their savings into a deposit. The truly prudent would put 20% down as deposit and keep the rest of their savings in liquid form.

What about the low income person who would only qualify for a loan equivalent to 70% of the purchase price but through prudent behaviour may have saved 30% of the deposit.

Property Market 2016

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