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Property Market 2018

castle2012

With supply still very tight. A homeless problem. Rising employment. It sure looks like where set for more large rises. There's not much to suggest otherwise. Any thoughts?

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Bob24

Cuddlesworth wrote: »

AirB&B could get you around way more rent. I've heard figures of 4-6k a month. Its actually at the point where I don't understand why people stay there and not just book a hotel.

Yeah Airbnb in the area is very expensive. I’d say many people who get those places on Airbnb use the living room as a second bedroom and max-out occupation (I still live in the area and regularly see large group of people with suitcases entering and leaving the developments). So I guess it’s still quite cheaper than hotels next door which will usually be 200 euros or more for one night in a double bedroom.

Bob24

manonboard wrote: »

omg! 350+! for a 1 bed, things are more crazy that i thought. 2200 rent! thats insane. I can understand a company paying for it and maybe giving it to travelers who are visiting.

Yeah it’s madness. Many 2 beds are now around 3000 per month so people are basically paying 1500 euros for a room in a shared apartment (the apartments are nice and allow them to walk to the office as well as to the city centre, but still, I clearly remember viewing the exact same apartments in 2006 when they were new and the rent was 1600 so it has almost doubled since just before the previous peek).

Villa05

Gerry Mandarin wrote:

I've noticed this too and would attribute it to lessons learned from Celtic tiger years 'property ladder' mentality and subsequent crash.

keane2097 wrote:

I find the growing narrative of 'we're all at it again' totally baffling tbh.

To be honest it was very baffling in the noughties also. The vast majority of people only buy one house for one purpose and that is shelter. The narrative you speak of was created by politicians/bankers to deflect/dilute blame away from themselves.

There at it again blowing up a property bubble and getting away with it. In that sense we have learned little or are powerless to prevent it

Villa05

Gerry Mandarin wrote:

I've noticed this too and would attribute it to lessons learned from Celtic tiger years 'property ladder' mentality and subsequent crash.

A 1 bed apartment priced at less than 10 years rent is a solid investment for a person that wishes to live in it. In that sense it's a lesson not learned from the crash

The_Conductor

Villa05 wrote: »

A 1 bed apartment priced at less than 10 years rent is a solid investment for a person that wishes to live in it. In that sense it's a lesson not learned from the crash

Not really- if the rent is 40%+ of a person's net income (and don't laugh- there are people out there paying 50-60-70% of their net income in rent).

Using the rent levels of today- to justify the house prices to a prospective purchaser- in a clear and unequivocal bubble- just isn't playing fair with a prospective purchaser- you're trying desperately to give them a feel-good factor to justify the stratospheric price they are paying for property.

I'm neither a purchaser nor a seller- and I bought in a bubble (in 1999).
I have read the Bacon reports- and had the pleasure of talking to Peter Bacon on two occasions (I was also a forester in another life- and have a common interest in Irish forestry with him). I would strongly advise anyone who is interested in the Irish property sector- to read Peter Bacon's reports from the nineties and noughties. Unfortunately- they were politically unpalatable- and languished on dusty bookshelves in more than one Government Department- an interesting talking piece for any visiting civil servants............

A lot of people credit David McWilliams with calling out the last bubble for what it was- however, he was walking in the shadow of the great Peter Bacon.

We, the Irish people, are on a spin-wash-recycle............ We are making the selfsame mistakes over and over again............ Sure- we may not have a building boom- and the economic situation has changed- however- we have binged on cheap credit- we have the third highest level of personal debt in the world (after Japan and the US)- and we are in for a wedgie once rates start to increase (and QE has been closed down- its a matter of time.........)

We have not learnt anything.

Cuddlesworth

Have we not been paying down personal debt the last few years?

[Deleted User]

The_Conductor wrote: »

.........I bought in a bubble (in 1999)..................

ah yes, the huge bubble of the late 90s

awec

What are people's thoughts on fixing at the moment?

We bought a house today (new build), so we're still a long way off having to decide, but with the noises about rate rises coming in it would seem prudent to fix now for the 5-7 years? Does anyone have an alternative view?

Diarmuid

https://www.irishtimes.com/life-and-style/homes-and-property/is-the-price-now-right-for-bulgarian-property-investments-1.3472723?mode=amp

No comment necessary

Garphiel

The_Conductor wrote: »

We, the Irish people, are on a spin-wash-recycle............ We are making the selfsame mistakes over and over again............ Sure- we may not have a building boom- and the economic situation has changed- however- we have binged on cheap credit
We have not learnt anything.

Have to disagree here, in relation to property prices anyway.
A recent Irish Times article, (Cash buyers lead the charge as Ireland’s property woes continue - Apr 3rd 2018) estimates cash buyers are making up 50 - 60% of all transactions.
The other buyers who require mortgages are limited to 90% LTV and 3.5x their salary.
Rising house prices are not a result of credit this time, so the situation is very different to 2006.
Also Irish household debt (despite being high) is rapidly falling, another Irish Times from September 2017 gives the stats:

New figures from the Central Bank show debt as a proportion of disposable income fell 10.2 per cent in the 12 months to the first quarter of 2017, the largest decline of any EU country.

We also have 100 billion euro on deposit in Irish banks, so rate hikes aren't the end of the world for everyone. To be honest, with bank stress testing on new mortgages - most people will manage through a few % hike once they hold onto their jobs. They might not afford the best sky package, new car, 2 holidays a year, etc but they'll keep their home if their priorities are right.

Also we are not taking out 110% mortgages, 2nd/3rd mortgages for buy-to-lets, borrowing 10x salary, etc.
To say we have not learnt anything is insulting and simply not true.

Garphiel

awec wrote: »

What are people's thoughts on fixing at the moment?

We bought a house today (new build), so we're still a long way off having to decide, but with the noises about rate rises coming in it would seem prudent to fix now for the 5-7 years? Does anyone have an alternative view?

If you don't plan on overpaying the mortgage, then fixing is good in my opinion. KBC for example let you overpay up to 10% of mortgage value if on fixed rate, any more introduces penalties.
Variable rates don't have any penalties for making lump sum payments or overpaying mortgage.

Villa05

Augeo wrote:

ah yes, the huge bubble of the late 90s

The increase in house prices between 96 and 2000 were far greater than the increases between 02 and 07.

Islander13

Garphiel wrote: »

Have to disagree here, in relation to property prices anyway.
A recent Irish Times article, (Cash buyers lead the charge as Ireland’s property woes continue - Apr 3rd 2018) estimates cash buyers are making up 50 - 60% of all transactions.
The other buyers who require mortgages are limited to 90% LTV and 3.5x their salary.
Rising house prices are not a result of credit this time, so the situation is very different to 2006.
Also Irish household debt (despite being high) is rapidly falling, another Irish Times from September 2017 gives the stats:

We also have 100 billion euro on deposit in Irish banks, so rate hikes aren't the end of the world for everyone. To be honest, with bank stress testing on new mortgages - most people will manage through a few % hike once they hold onto their jobs. They might not afford the best sky package, new car, 2 holidays a year, etc but they'll keep their home if their priorities are right.

Also we are not taking out 110% mortgages, 2nd/3rd mortgages for buy-to-lets, borrowing 10x salary, etc.
To say we have not learnt anything is insulting and simply not true.

Excellent post. A lot of these facts get lost in the general hysteria.

awec

Out of curiosity, when we talk about rate rises what do we mean?

Are we going to see mortgages with 6-7% rates in the next few years? Are we talking a single perxentage point?

Bob24

awec wrote: »

Out of curiosity, when we talk about rate rises what do we mean?

Are we going to see mortgages with 6-7% rates in the next few years? Are we talking a single perxentage point?

I don’t think rates will double but you never know (if they did, I’d say there would be a blood bath in terms of mortgage arrears ... many people who are buying nowadays are paying mostly interest in the first few years of the mortgage, so doubling the rate would almost double their monthly repayments).

Wanderer78

Islander13 wrote:

Excellent post. A lot of these facts get lost in the general hysteria.

There are problems with this thinking though, you d be surprised of how many individuals and institutions have not realised the importance of our money creation systems and the role banks play in this, the fact that banks actually create the majority of our money via loans, my suspicions are, the majority of our politicians and their advisors have not realised this, therefore we have actually not changed much in regards regulation in order to control these matters, something that played a critical role in causing the crash in the first place. Yes we have learned a little from the crash, but we re defaulting to the norm, which will probably eventually lead to another crash.

Shedite27

Garphiel wrote: »

If you don't plan on overpaying the mortgage, then fixing is good in my opinion. KBC for example let you overpay up to 10% of mortgage value if on fixed rate, any more introduces penalties.
Variable rates don't have any penalties for making lump sum payments or overpaying mortgage.

UB and BOI also allow 10%

Mike3549

awec wrote: »

What are people's thoughts on fixing at the moment?

We bought a house today (new build), so we're still a long way off having to decide, but with the noises about rate rises coming in it would seem prudent to fix now for the 5-7 years? Does anyone have an alternative view?

We bought a place 4 years ago, everybody here on boards said, the only way for interest rates is up. It was reduced 3 or 4 times since then. Im gonna stay on variable until I hear anything about rate increases. You can fix, if you want a peace of mind, plus you can exit fixed rates almost without any penalty lately.

Wanderer78

Mike3549 wrote:

We bought a place 4 years ago, everybody here on boards said, the only way for interest rates is up. It was reduced 3 or 4 times since then. Im gonna stay on variable until I hear anything about rate increases. You can fix, if you want a peace of mind, plus you can exit fixed rates almost without any penalty lately.

You can understand why people think this though, central banks have little or no choice but to go up now, if a down turn occurred now, they'd have very few options to react, they will rise soon, but could this rise actually cause a down turn?

[Deleted User]

Villa05 wrote: »

The increase in house prices between 96 and 2000 were far greater than the increases between 02 and 07.

Well did values ever go below 99 levels since 99? I think not by much if any so I don't see how it was a bubble.

Bob24

Wanderer78 wrote: »

but could this rise actually cause a down turn?

Yes that is a very valid question.

This is why I don’t see any sharp rise anytime soon, too risky from the central banks’ perspective

Having that in mind, if the loan books of Irish banks improve and there is a bit more competition here, we could in the coming years see stable or slightly decreasing rates for borrowers in Ireland while ECB rates are rising very slowly. To be clear, I not saying it will happen for sure, but I definitely wouldn’t discard that possibility.

awec

Mike3549 wrote: »

We bought a place 4 years ago, everybody here on boards said, the only way for interest rates is up. It was reduced 3 or 4 times since then. Im gonna stay on variable until I hear anything about rate increases. You can fix, if you want a peace of mind, plus you can exit fixed rates almost without any penalty lately.

The reason I ask is I'm trying to budget worst-case scenario for our payments, but I don't want to waste time budgeting for the completely bonkers scenarios.

What do the banks do for the stress test. It's +2% if I remember right?

Bob24

awec wrote: »

The reason I ask is I'm trying to budget worst-case scenario for our payments, but I don't want to waste time budgeting for the completely bonkers scenarios.

What do the banks do for the stress test. It's +2% if I remember right?

Yes that’s what I’ve read about most banks (I also read AIB is using a hard 6% rate figure which is more than +2%, but they have lower requirements on what needs to remain on your account after paying the mortgage to cover other expenses, so at the end of the day it’s similar).

I think if you budget for 2% max increase in a 3-4 years timeframe you are fairly safe.

If we are talking 10 years prediction, I wouldnt believe anyone who tells you they are able to provide credible figures (there are too many unknown or potentially unexpected factors).

awec

Bob24 wrote: »

Yes that’s what I’ve read about most banks (I also read AIB is using a hard 6% rate figure which is more than +2%, but they have lower requirements on what needs to remain on your account after paying the mortgage to cover other expenses, so at the end of the day it’s similar).

I think if you budget for 2% max increase in a 3-4 years timeframe you are fairly safe.

If we are talking 10 years prediction, I wouldnt believe anyone who tells you they are able to provide credible figures (there are too many unknown or potentially unexpected factors).

I've budgeted it out against a 6% interest rate, based off my LTV ratio on Day 0. We would have to cut back if the rates went that high, but would still be fine. I am considering fixing for 3/4 years just to give us some peace of mind while we furnish the place etc.

If one of us lost our job and the rates went to 6% we'd be in trouble though, but I have no idea how any FTB in the Dublin + commuter belt region would be able to cover themselves in this scenario. Maybe if they've inherited a big wedge that gives them a huge deposit.

Bob24

awec wrote: »

I've budgeted it out against a 6% interest rate, based off my LTV ratio on Day 0. We would have to cut back if the rates went that high, but would still be fine. I am considering fixing for 3/4 years just to give us some peace of mind while we furnish the place etc.

You seem like a rather prudent borrower (at leat much more prudent than the average Irish borrower!)

awec wrote: »

If one of us lost our job and the rates went to 6% we'd be in trouble though, but I have no idea how any FTB in the Dublin + commuter belt region would be able to cover themselves in this scenario. Maybe if they've inherited a big wedge that gives them a huge deposit.

That’s the thing, if there was an economic crisis with many people losing jobs combined to this type of rates, the whole house of cards would collapse (and it would be problematic also for people who can still afford their mortgage and even for people who don’t have mortgages as the banking system as a whole and the property market would both be under severe threat). I’m not saying don’t prepare for it - you are right to consider all options and it would be great if all borrowers did so - but it’s really doomsday scenario.

I also bought a place recently and still in two minds about fixing rates. Currently interests represent half of my monthly repayments so I am not as exposed as most to rate increases (still I am very exposed, just not as much as many others); so I might take the chance of seeing rates dropping and the option to make early payments as we have the means to do so if we want to. But it is a bit of a gamble and I’m not sure which option is best.

aloooof

awec wrote: »

I've budgeted it out against a 6% interest rate, based off my LTV ratio on Day 0. We would have to cut back if the rates went that high, but would still be fine. I am considering fixing for 3/4 years just to give us some peace of mind while we furnish the place etc.

If one of us lost our job and the rates went to 6% we'd be in trouble though, but I have no idea how any FTB in the Dublin + commuter belt region would be able to cover themselves in this scenario. Maybe if they've inherited a big wedge that gives them a huge deposit.

Our thinking on this is that we've budgeted for 5.5% interest. We're considering fixing for 5 years and trying to overpay the 10% allowed.

If the house has retained it's value in 5 years time, we should then be in the 50%-80% LTV bracket, which in theory potentially gives us a reduced rate as compared to the variable rate for a 90% LTV. In practice, that could still mean a 5.5% rate, while the 90% LTV is 6% say, but in theory it's another additional bit of a buffer towards increasing interest rates.

awec

Bob24 wrote: »

You seem like a rather prudent borrower (at leat much more prudent than the average Irish borrower!)

That’s the thing, if there was an economic crisis with many people losing jobs combined to this type of rates, the whole house of cards would collapse (and it would be problematic also for people who can still afford their mortgage and even for people who don’t have mortgages as the banking system as a whole and the property market would both be under severe threat). I’m not saying don’t prepare for it - you are right to consider all options and it would be great if all borrowers did so - but it’s really doomsday scenario.

I also bought a place recently and still in two minds about fixing rates. Currently interests represent half of my monthly repayments so I am not as expenses as most to rate increases (still I am very exposed, just not as much as many others); so I might take the chance of seeing rates dropping and the option to make early payments as we have the means to do so if we want to. But it is a bit of a gamble and I’m not sure which option is best.

Is there a way of knowing how much interest vs capital you are paying before you actually start paying the mortgage?

Trying to work out how long it will take us to drop into the lower interest rate bracket based off of our initial payment rate + house price remaining static.

aloooof

awec wrote: »

Is there a way of knowing how much interest vs capital you are paying before you actually start paying the mortgage?

Trying to work out how long it will take us to drop into the lower interest rate bracket based off of our initial payment rate + house price remaining static.

Have a look at this, to give you an idea:

http://amortization-calc.com/home-purchase-mortgage-calculator/

awec

aloooof wrote: »

Have a look at this, to give you an idea:

http://amortization-calc.com/home-purchase-mortgage-calculator/

Jaysus it is scary to see how much banks make in interest.

Looks like it'd take us about 5 years to drop into the lower LTV rates.

Wanderer78

awec wrote: »

Jaysus it is scary to see how much banks make in interest.

Looks like it'd take us about 5 years to drop into the lower LTV rates.

and the disturbing thing is, we ve done little or nothing to address these issues, we have to take back some sort of control of our banking and money creation systems, we cannot allow banks to be the main source of money creation.