PropQueries wrote: » If inflation rises too much e.g. 5%, then interest rates rise. If interest rates rise by just 3%, that means someone who was previously approved for a €300k mortgage would then be only approved for a €200k mortgage. Property prices fall in a high inflation/ high interest rate environment. Property is not a hedge against inflation. It’s actually the opposite. Property price increases in the past were mostly in low inflation/ low interest rate environments. As interest rates are below zero in the EU, if inflation/ interest rates are the reason for property prices, they will most likely fall if either increase.
Assetbacked wrote: » Where will the money come from though?
lawred2 wrote: » Where does all money come from?
JJJackal wrote: » If inflation rises, incomes rise... If inflation was 5% and incomes eg pensions and unemployment benefit etc didnt rise people would not be able to afford basic necessities If incomes rise therefore you can borrow more and also afford to pay a bigger debt
PropQueries wrote: » I think people in Ireland believe that eveyone has our levels of debt. The only countries in the EU with a debt problem are Ireland, Italy and Greece. Spain, Portugal and France you can add in too but they're generally fine. The debt problems in Ireland, Italy and Greece are due to us paying significantly higher public servant salaries and pensions than most other EU countries. It has very little to do with the bank bailout or unemployment payments. After this pandemic ends, the EU members (there's 27 of them) are going to tell Ireland, Italy and Greece to make ends meet and there's no more free cash coming. The EU is not going to risk an inflation spiral just to help us out. If anything, rather than rising, I believe wages will fall significantly in Ireland over the next ten years. We're an exporting nation and if our costs increase too much, the exporting companies will close or relocate to eastern european countries where the cost base and wages are significantly lower. Our debt is real and I believe we're going to have to pay it back in full and at significant pain to the Irish citizens.
JJJackal wrote: » Fugayzi, fugazi. It's a whazy. It's a woozie. It's fairy dust. it doesn't exist. It's never landed. It is no matter. It's not on the elemental chart.
PropQueries wrote: » You're kind of right regarding the central banks putting themselves in a bind and in relation to the hope of them allowing inflation to rise to pay off the national debt. However, from looking at the debt to GDP for each EU/eurozone member in Q1 2020, only 5 countries had a debt to GDP of over a 100%. All the other 22 EU/eurozone members had a debt to GDP of under 100%. Of those, 13 had a debt to GDP of under 50%. The ECB has to take into account all members of the eurozone. We're not the USA. If the 22 fiscally responsible EU/eurozone members are going to take the risk of allowing a wage/price inflation spiral take hold to help out the 5 countries that were fiscally irresponsible is up for debate. Especially as we all know how that ends. There's another major fly in the ointment though. Pensioners. They need higher interest rates to pay their pensions. They vote. That's why I think interest rates will rise in the eurozone sooner rather than later. To bring it back full swing to property, once interest rates start rising, property prices fall very quickly.
pearcider wrote: » Very true. The inflation is coming soon and property is not a bad place to park your cash, if you are paying cash. No doubt the property market is being held aloft by the central banks driving capital from bonds and cash.
pearcider wrote: » There’s no way interest rates will rise. Too much debt. They tried to raise rates in 2018 and nearly crashed the world economy. Real rates have been negative for nearly 14 years now. They won’t attempt it again. Property is a pretty good hedge against inflation. That’s just a fact.
nhoj88 wrote: » With October Irish budget, American election in November, Brexit 31st of December, and removal of evictions in early January are we in for a big shake up early next year? Will we see an even bigger increase of private landlord exit the market and more ex rentals for sale? If a tenant has not paid rent due to COVID from march they have been protected from eviction by the government up to January, with 9 months rent due they will have to vacate the premises with 14 days notice or pay the outstanding balance, I image tenants will leave and look for a new tenancy elsewhere instead of paying the bill leaving the landlords with alot of vacant premises and with more uncertainty ahead will more then likely throw in the towel and sell up.... What are your thoughts?
nhoj88 wrote: » Can you have inflation (cost of living) without interest rate rises (mortgage APR increases)? Genuine question? From above do you mean that rather then holding cash buy a debt free property to store your wealth and wait for inflation to come around for its value to increase(or being worth more then the cash it was bought for)? Whereas if you take a 60% LTV mortgage the percentage increases of the loan will cancel out the benefits of the asset increasing(or being worth more then the cash it was bought for).
PropQueries wrote: » I think people in Ireland believe that eveyone has our levels of debt. The only countries in the EU with a debt problem are Ireland, Italy and Greece. Spain, Portugal and France you can add in too but they're generally fine.
Marius34 wrote: » It's fine you share your opinion, but it would be nice that you would say so yourself. You would have a hard time to find where Spain and Portugal are better off with their debt than Ireland.
PropQueries wrote: » 13 Rushbrook Grove, Templeogue 09/04/2014 - PPR - €383,000 29/08/2020 - MyHome Asking Price - €425,000 MyHome link here: https://www.myhome.ie/residential/brochure/13-rushbrook-grove-templeogue-dublin-6w-d6w-p650/4450894 The June 2020 CSO Residential Property Price Index stated that “Dublin residential property prices have risen 91.4% from their February 2012 low”.
Pelezico wrote: » Templeogue is not served by Dart or Luas and will probably lag the market. Dundrum is a much better buy.
awec wrote: From 2005 to 2008 the ECB refinancing rate went from 2.25% to 4.25%.
Villa05 wrote: » Was that the period where we were introduced to the 110% mortgage which probably offset the impact of higher rates.
Hubertj wrote: » I heard about 110% mortgages. So how did it work? You just asked and then blow it on furniture and TVs? Or was it only for renovating second hand homes?
Hubertj wrote: I heard about 110% mortgages. So how did it work? You just asked and then blow it on furniture and TVs? Or was it only for renovating second hand homes?
PropQueries wrote: » Not hard at all. Here’s the article from the Irish Times explaining that we have the third highest debt per capita, not in the EU, but in the world. Irish Times article here: https://www.irishtimes.com/business/economy/ireland-s-200bn-debt-burden-how-did-we-get-here-1.3943085?mode=amp
Marius34 wrote: » It doesn't say anything that Spain, Portugal has less problems than Ireland to serve their debt. And based on Irishtimes of debt per capita, Greece debt doesn't look so high, around Euro zone avarege, better than Belgium, France, Austria. And Portugal, Spain is better than Germany.
PropQueries wrote: » What it does show is that our debt problem is very real. Some commentators in Ireland seem to believe that the ECB will allow inflation to take hold and never increase interest rates to inflate Irish debt away. I don't believe that premise for two reasons: 1. The majority of EU members don't have a debt problem and would have nothing to gain from such actions (even post-covid). 2. America is already on the verge of calling the ECB a currency manipulator. But it's not just America that will have a problem with such actions. Poland, Sweden etc. have their own currency and will they really allow the Euro to weaken to such an extent that it allows eurozone member industries to undercut their own industries and jobs? The EU center of influence is already moving East e.g. Berlin is basically in Eastern Europe. Here's the debt to GDP in Q1 2020 for countries not in the euro but impacted if the ECB adopts such a policy: Poland: 47% Denmark: 33% Sweden: 36% Romania: 37% Hungary: 66% Czech Republic: 32% Bulgaria: 20% Croatia: 74% Norway: 41% Switzerland: 32% Iceland: 28% Here's the debt to GDP in Q1 2020 for countries in the euro: Finland: 64% Netherlands: 49% Germany: 61% Lituania: 33% Latvia: 37% Estonia: 9% Malta: 44% Slovenia: 69% Austria: 72% France: 101% Belgium: 104% Italy: 137% Portugal: 120% Spain: 98% Greece: 176% As you can see, the majority of countries in Europe don't have a debt problem. Ireland is in a very small group of countries with a real debt problem and the likelihood of continued free money and low interest rates because of the misinformation that all european countries "are all in the same boat" is very unlikely (I think). I believe interest rates will rise more quickly and sooner than many believe. Once interest rates start rising, property values fall very quickly. Maybe I'm wrong.
PropQueries wrote: » What it does show is that our debt problem is very real.
Marius34 wrote: » Yes, debt is real, and it's a problem. But none of those numbers tells that Ireland has worst debt problem in Europe. Greece has much bigger debt problem than Ireland. Spain, Portugal not any better than Ireland.
PropQueries wrote: » What it does show is that our debt problem is very real. Some commentators in Ireland seem to believe that the ECB will allow inflation to take hold and never increase interest rates to inflate Irish debt away. I don't believe that premise for two reasons: 1. The majority of EU members don't have a debt problem and would have nothing to gain from such actions (even post-covid). 2. America is already on the verge of calling the ECB a currency manipulator. But it's not just America that will have a problem with such actions. Poland, Sweden etc. have their own currency and will they really allow the Euro to weaken to such an extent that it allows eurozone member industries to undercut their own industries and jobs? The EU center of influence is already moving East e.g. Berlin is basically in Eastern Europe. Here's the debt to GDP in Q1 2020 for countries not in the euro but impacted if the ECB adopts such a policy: Poland: 47% Denmark: 33% Sweden: 36% Romania: 37% Hungary: 66% Czech Republic: 32% Bulgaria: 20% Croatia: 74% Norway: 41% Switzerland: 32% Iceland: 28% Here's the debt to GDP in Q1 2020 for countries in the euro: Finland: 64% Netherlands: 49% Germany: 61% Lituania: 33% Latvia: 37% Estonia: 9% Malta: 44% Slovenia: 69% Austria: 72% France: 101% Belgium: 104% Italy: 137% Portugal: 120% Spain: 98% Greece: 176% As you can see, the majority of countries in Europe don't have a debt problem. Ireland is in a very small group of countries with a real debt problem and the likelihood of continued free money and low interest rates because of the misinformation that all european countries "are all in the same boat" is very unlikely (I think). I believe interest rates will rise more quickly and sooner than many believe. Once interest rates start rising, property values fall very quickly. Maybe I'm wrong. Just to show the impact of interest rates on the value of a property, I put some numbers into a mortgage repayment calculator. As you can see, a couple that may be approved for a maximum €300,000 mortgage today would only be approved for a mortgage of €200,000 in 5 years times if mortgage interest rates did increase by 3% in the next 5 years. Monthly repayments on a typical 30-year mortgage of €300,000 at 3% = €1,264.81 Monthly repayments on a typical 30-year mortgage of €200,000 at 6% = €1,199.10
PropQueries wrote: » ECB policy will be dictated by what's best for the eastern european members over the next 5 to 10 years. Up to now, they were the new kids on the block and had little influence. That will most likely no longer continue to be the case. I believe the premise from some commentators that ECB policy will continue to be dictated by what's in the best interests of the 5 or 6 members of the 27 EU countries who have a debt problem is a falsehood. Basically, I believe that Ireland should prepare for such a scenario and very quickly. Just to show the impact of interest rates on the value of a property, I put some numbers into a mortgage repayment calculator. As you can see, a couple that may be approved for a maximum €300,000 mortgage today would only be approved for a mortgage of €200,000 in 5 years times if mortgage interest rates did increase by 3% in the next 5 years. Monthly repayments on a typical 30-year mortgage of €300,000 at 3% = €1,264.81 Monthly repayments on a typical 30-year mortgage of €200,000 at 6% = €1,199.10
schmittel wrote: » I suspect ECB policy will ultimately try to follow whatever path is most likely to keep the bloc and the euro intact. Greece have already floated the idea of leaving the euro to reinstate domestic monetary policy, Italy not far behind. ECB will bear this in mind. Equally if they implement policy solely to help the PIIGS, then Germany/Netherlands etc may start to think they are better off without the euro. Difficult to see how ECB can keep both interests happy!
