No wonder millennials can't afford a mortgage

andekwarhola wrote: »

A friend of mine bought a place in a central working class area of Dublin (now a bleated hit with professionals) in the early 90s and I think it was around 60k or 70k. And he had to extend it on top of that. Will ask him though to confirm. Also interest rates in the 80s and well into the early 90s were in the mid-teens unlike now.

It's unfair to say that I was crowing. Our house in Dublin cost about 4 times our then joint income around 13 years ago. A modest house in a normal suburb on the outskirts of Dublin. Hardly a kings ransom. I'm not moaning about being 'priced out' of Sandymount, take note.

The only point I was making was that people can't expect to live in the places that their parents did by default. You have to buy where you can afford. Plus buying a house isn't and never will be a right and some people won't be able to do it for various reasons. The controls around mortgage lending these days are actually sensible enough.

That's obviously why social housing and the availablity of rental property is a bigger issue than people that can afford houses buying those houses.

I personally don't think the credit limits are a bad idea either. The problem is that it hasn't been paired with a sensible policy to deflate prices.

The elephant in the room is that most of the powers that be are quite happy with the prices where they are because it helps bank balance sheets and also makes the middle aged voter happy because they're not in negative equity.

It's impossible to have cheaper housing without shafting the poor bastards who bought over the odds last time. But as with everything, **** rolls down hill and we're the ones picking up the tab.

I also don't think I'm automatically entitled to live where my parents bought (and where I still live) which is just outside the M50. Their parents bought just inside the M50 (which didn't exist) and their parents lived within the canals in the city centre.

Generations are naturally pushed outwards. That's just population growth and it's fine.

What's not fine is that older people in my generation were getting houses in Kilcock for what my parents got in Lucan and people my age are expected to buy in Mullingar or Navan. It's gotten absolutely ridiculous and public transport hasn't kept up.

I have no problem living in Galway, as long as my commute isn't 3 hours a day.

Interest rates back in the day were higher, yes. But that's insignificant against the surge in house prices. It really is. Who cares if you're paying 14% on a morgage when the house is worth ten times as much a few years later? You could always refinance.

We agree that not everybody should be able to buy a house. There will always be a strata of society which needs social and affordable rental properties. I might sound priviliged saying this, but I didn't think I was going to be one of them. It was drilled into me at an early age that if I worked hard I could do whatever I want. I worked my arse off and now I have a Masters in a field which globally attracts very high salaries. I'm good at my job and yet I'm only on €30k. I was making $80k in Australia for the same job at entry level. I would likely be on $150k now, there's an acute shortage of skills in my area at the moment. Some people would say "Then leave". I already did and I probably will again.

But handwaving a problem by telling the bright youth like myself (I'm definitely not blowing my own trumpet.....) to emigrate is madness.

andekwarhola wrote: »

Not sure what 'deflating prices' means. Two people in and around the average industrial wage (with a 10% deposit) can technically qualify for a 300k mortgage which gives you choice in Dublin albeit in perfectly fine but not trendy areas. It's fair enough. As said, it's renters and those on low income that are really in the sh!t at the moment.

Anybody I know that bought in the commuter counties didn't do it because there was nothing in Dublin. There was just nothing they wanted, whether in house size or area.

The thing about the average industrial wage is that half of the population makes more and half makes less.

I fall into the second half, by a substantial margin and there's not much I can do to improve it.

Augeo wrote: »

Well to be fair............"He bought a three bed house on a single income 20 minutes from the city centre in 1992, the year I was born. It was £20k which is around €42k in today's money and he was making around £9k a year which is roughly €18.5k in today's money"

I can remember in the early 90s Tayto crisps were 16p, they are €1 now at least in most shops.

Ireland was grim enough in the 80s and early 90s, you were doing well to have a job at all.

Price increases occur, unfortunate no doubt but such is life.

Before making any quick comparisons as well, try running any monthly wages vs mortgage repayment figure you hear from back then through a mortgage calculator that figures in interest rates of up to 13 or 14%.

But yeah, people was rolling in it :pac:

Make porridge in the morning and bring packed lunch and home cooked dinners with leftovers for lunch next day.

There was research about this exact topic recently which showed how wages and wealth have shifted up the age range. Since the baby boomers every generation has experienced increasing wages relative to cost of living and spent less on housing as a percentage of wages.

I think it's important to distinguish between wages and wealth. Taxes on wages affect everyone, but taxes on wealth can only affect those with wealth such as propertie, shares, investments etc. So while old folks are happy to whine about millennials and tax on wages, you will never hear them suggest a tax on wealth. The reason you won't hear them suggest wealth taxes is because the old folks have almost all the wealth.

So it's easy to complain about young people eating avacado toast when the young people of today face housing costs rising faster than wages. Completely different circumstances than generations before them faced.

Augeo wrote: »

Wow, house prices doubled in 3 years back then. Frightening stuff, how did people manage at all.

Houses in different places cost different amounts shocker!

I bought my three bed in Dublin in 2002 for 129k. I thought that was loads but it's impossible to get a house round here now for less than 220. I was 25 and had just started working so wasn't earning loads but still had no problem getting a mortgage.

My daughter will leave college next year with a much better earning power than I ever had probably earning multiples of what I got but will still be unable to buy a house. There is something really messed up about that.

Waste of time moaning about property prices at the top of the cycle.

I Bought a 3 bed semi in a nice area in 2012 as an investment property for €185k.

Same houses were going for €400k plus 5 years earlier.

It’s all swings and roundabouts.

The current generation have way more disposable income than previous generations, they’re just far more whiny.

This is from the UK but I think a lot of it would be relevant here. I'd love to see the same stats for Ireland.

Here's to bits from it
https://www.theguardian.com/money/2015/aug/04/homeownership-the-generation-that-had-it-so-good

Life has changed a lot since fledgling homeowners took their first steps on the property ladder in 1969. Back then, the average first home cost £4,000, according to data from the Office for National Statistics – and you would typically have been able to buy it at the tender age of 25.

Not any more. Now just 8% of 25-year-olds make it on to the property ladder, the Council of Mortgage Lenders says. The average price of a first home has increased by 5,225% over the past 46 years, to £209,000. This has massively outpaced the incomes of first-time buyers, which have grown at less than half that rate. Shelter estimates that today’s first-time buyers spend 30% to 40% more to buy their first home today than they would have done in 1969.

“If you were able to buy your first home before prices started rocketing, you have received massive unearned wealth gains – but only at the expense of the generation who are now locked out of ownership, and stuck paying the highest rents in Europe,” says Duncan Stott, director of the affordable housing campaign PricedOut. “Buying today requires your income to be in the top 20% of earnings and a willingness to take out unprecedented levels of mortgage debt.”

More than a third of property wealth in the UK is now owned by households where at least one occupant is 65 or older, and nearly one in 10 (9%) of 55- to 64-year-olds live in households with net property wealth of £500,000 or more; the highest of any age group, says the ONS.

This trend shows no sign of abating and house prices are continuing to rise, with the typical pensioner’s home increasing by an average of £900 a month this year, a report by Key Retirement shows.

Already, 28% of those aged 22 to 30 years of age have been forced to remain at their family home, or move back. Statistics from the Chartered Institute of Housing (CHS) show that home ownership among 25- to 34-year-olds has plummeted from 67% in 1991 to 26% in 2013while ownership among those aged 65 to 74 has increased from 62% to 77%. In 1981 this figure stood at just 49%.

A recent report from the Intermediary Mortgage Lenders Association accused baby boomers of “hoarding” large family homes, contributing to an inertia in the market that keeps aspiring buyers off the property ladder. Meanwhile the CHS warned of a “perfect storm” where older, already privileged homeowners buy and rent homes to those priced out of ownership.

However, not everyone believes new buyers are in that much trouble today. “With so much governmental support being provided for those wanting to step on the property ladder, it can hardly be claimed that this generation have it any worse,” says David Ingram, founder of MyLocalMortgage.co.uk.

It's not a very long article so I'd advise to read it all. As I mentioned it's Uk specific but I'd imagine that since the situation is similar here a lot is relevant.

Augeo wrote: »

What excuses did you have for not retraining or upskilling when rents were low ?
Some folk will always have excuses
It's the way of life.

I upskilled. I mentioned it here before but between 2008 and now I got 2 degrees, a masters and a HDIP in software development. The masters was the only one I paid for and I'm still paying it off. However between when I started the upskilling to when I saw dividends from it was 8 years.
If property was now the way it was even 5 years ago I'd be able to buy but it's going up so fast I can't. And that's me with years of experience and a feck loads of qualifications. I can only imagine what it's like for someone who's working in a lower paying profession.