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Irish Property Market 2020 Part 2

Graham

Continued from here:

https://www.boards.ie/vbulletin/showthread.php?t=2058041687

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nerrad01

its obviously a supply issue, the overwhelming majority of what has been built was snapped up over the last number of years by institutional landlords and is funneled into the rental market. Also the market was essentially frozen due to covid so a lot of pent up demand from people wanting to buy the few properties out there. Government policy has not and will not change this situation so its here to stay.

There is still plenty of people with secure jobs to purchase and not enough properties in desirable areas, i cant see this changing anytime soon.

thefridge2006

https://www.irishtimes.com/business/economy/dublin-house-prices-now-falling-by-1-6-as-coronavirus-infects-market-1.4380685

Dublin house prices now falling by 1.6% as coronavirus infects market

Nothing to see here folks......

PropQueries

brisan wrote: »

We have had this argument over and over again and its been proved to be false
PEOPLE on low wages do affect the housing market ,both the rental sector and the sales market

That's true. A couple, both on the minimum wage in Ireland could very easily afford the monthly repayments on a 25 year mortgage for many standard three-bed semis outside the major cities. Assuming they could get mortgage approval.

brisan

PropQueries wrote: »

That's true. A couple, both on the minimum wage in Ireland could very easily afford the monthly repayments on a 25 year mortgage for many standard three-bed semis outside the major cities. Assuming they could get mortgage approval.

A person on 20k who loses their job knocks 70k off any potential mortgage a couple can apply for
Lower available mortgages means lower prices

fliball123

Shoden wrote: »

To those who were arguing about whether a downward trend was on the way a few pages ago. I spent months thinking that prices were about to drop. Then I had a realisation, those who were employed in sectors that were hit the worst: hospitality, tourism, entertainment etc aren't your typical mortgage candidates, and those in steady jobs had nothing to do but save for months!

You only have to look at the tax take coming in it hasnt dropped at all so it would kind of point to the fact that those going onto Covid payments were not paying much tax as they were not getting paid enough

stefanovich

What percentage of property price is tax? 50%?

Why don't the government stop taxing people's homes?

Graham

thefridge2006 wrote: »

Dublin house prices now falling by 1.6% as coronavirus infects market

Nothing to see here folks......

That's what, 6k for your average FTBer in Dublin.

Considering what's going on around us, not a bad outcome.

Bubbaclaus

thefridge2006 wrote: »

https://www.irishtimes.com/business/economy/dublin-house-prices-now-falling-by-1-6-as-coronavirus-infects-market-1.4380685

Dublin house prices now falling by 1.6% as coronavirus infects market

Nothing to see here folks......

Actually, property prices rose slightly between July and August. It is the YoY figure that fell, but prices actually creeped upwards slightly in both Dublin and in the country as a whole for August compared to the month prior.

Always easy to package the data in a way that suits an agenda.

Shoden

brisan wrote: »

We have had this argument over and over again and its been proved to be false
PEOPLE on low wages do affect the housing market ,both the rental sector and the sales market

My main point was that people whose income was not effected have been able to save hardcore for months as there's nothing else to do.

Dwarf.Shortage

Bubbaclaus wrote: »

Actually, property prices rose slightly between July and August. It is the YoY figure that fell, but prices actually creeped upwards slightly in both Dublin and in the country as a whole for August compared to the month prior.

Always easy to package the data in a way that suits an agenda.

The Irish Times did the packaging tbf, around these parts aren't they filed under "property cheerleaders" with the opposite agenda to the one you suggest.

stefanovich

Shoden wrote: »

My main point was that people whose income was not effected have been able to save hardcore for months as there's nothing else to do.

Have they not just been forced to save? Something they could have chosen to do anyway?

KennisWhale

thefridge2006 wrote: »

https://www.irishtimes.com/business/economy/dublin-house-prices-now-falling-by-1-6-as-coronavirus-infects-market-1.4380685

Dublin house prices now falling by 1.6% as coronavirus infects market

Nothing to see here folks......

What is more concerning is the 40% fall off in transactions in August ("concerning" in terms of potential for what is to come), which followed (by comparison to the same months in 2019) 40.7% lower in July, 53.6% lower in June, 46% lower in May and 29% lower in April.

The government measures have served a purpose of inflating the market in recent years rather than ensuring it grew sustainably. As such, it is perhaps being propped up currently by the government rather than being allowed to function a bit more freely (think of the government's HtB and rental assistance schemes, eviction protection laws for poor tenants and mortgage holders, as examples).

cnocbui

stefanovich wrote: »

What percentage of property price is tax? 50%?

Why don't the government stop taxing people's homes?

Sinn Fein wants to abolisgh property tax. Afaik, they are the only Irish political party that have a policy of actualy reducing a tax. All the others are just variations on a theme of 'this is how we will spend your money and ideally we want more of it'.

Shoden

stefanovich wrote: »

Have they not just been forced to save? Something they could have chosen to do anyway?

Splitting hairs, either way a lot of people have a lot more cash on hand.

stefanovich

cnocbui wrote: »

Sinn Fein wants to abolisgh property tax. Afaik, they are the only Irish political party that have a policy of actualy reducing a tax. All the others are just variations on a theme of 'this is how we will spend your money and ideally we want more of it'.

I'm not just talking about property tax.

I am talking tax on materials, tax on labour, stamp duty etc etc. Half the price of a home goes to the government.

PropQueries

nerrad01 wrote: »

its obviously a supply issue, the overwhelming majority of what has been built was snapped up over the last number of years by institutional landlords and is funneled into the rental market. Also the market was essentially frozen due to covid so a lot of pent up demand from people wanting to buy the few properties out there. Government policy has not and will not change this situation so its here to stay.

There is still plenty of people with secure jobs to purchase and not enough properties in desirable areas, i cant see this changing anytime soon.

That may be true. It's not really a 'housing supply' problem. More of a 'housing location' problem. That could be solved with the whole WFH phenomenon if the Government actually had a bit of joined up thinking. A similar, but more modern take on the scheme like the one the US had in the film Far and Away would work perfect.

In relation to the supply of properties in desirable areas, they may be coming into the market in bulk over the next ten years due to life expectancy etc. It's how many who will be able to afford them at todays prices when all these properties do begin to enter the market that will be the issue at that time.

Bubbaclaus

Dwarf.Shortage wrote: »

The Irish Times did the packaging tbf, around these parts aren't they filed under "property cheerleaders" with the opposite agenda to the one you suggest.

They packaged it the way they always do, comparing with same period last year, which is a fair and reasonable way to set it out.

However, anyone using it to claim the sky is falling would not be fair and reasonable as that viewpoint doesnt match the data. Prices went up between July and August.

brisan

fliball123 wrote: »

You only have to look at the tax take coming in it hasnt dropped at all so it would kind of point to the fact that those going onto Covid payments were not paying much tax as they were not getting paid enough

There are plenty of properties that 2 people on minimum wage could afford to buy

https://www.myhome.ie/residential/ireland/property-for-sale?types=36|97|40|39|38|37|42|45|46|47|48|49|51|53|54&maxprice=150000

fliball123

brisan wrote: »

fliball123 wrote: »

You only have to look at the tax take coming in it hasnt dropped at all so it would kind of point to the fact that those going onto Covid payments were not paying much tax as they were not getting paid enough

There are plenty of properties that 2 people on minimum wage could afford to buy

https://www.myhome.ie/residential/ireland/property-for-sale?types=36|97|40|39|38|37|42|45|46|47|48|49|51|53|54&maxprice=150000

True but if they have lost their job or one of them I reckon no bank would give them a mortgage while on Covid payments so they are effectively locked out of the market unless they are cash buyers

landofthetree

Low paid workers in Ireland pay little tax.

Ireland is one of the best places in the developed world for a low income worker to pay taxes, new figures show. Someone earning €18,000 a year pays an effective tax rate of less than 3 per cent in Ireland, according to the Irish Tax Institute. This compares with a rate of 26 per cent in Germany.

stefanovich

landofthetree wrote: »

Low paid workers in Ireland pay little tax.

I know of people who are working single parents that pay negative tax.

brisan

fliball123 wrote: »

True but if they have lost their job or one of them I reckon no bank would give them a mortgage while on Covid payments so they are effectively locked out of the market unless they are cash buyers

The argument was that even when working they would not be in a position to buy property ,which obviously is not true .
So the argument was low paid workers losing their jobs has no effect on the property market which is patently untrue

HotMama89

I think there is very little incentive for people to trade up as well for example HTB is only for first time buyer new builds so to trade up the same house is costing me 30k more than a ftb.

People trading up are limited to second hand houses and there's no incentive for developers to builder bigger houses more suited to people trading up.

In my area every new house built are mostly starter homes which are smaller than my own.

random_banter

Shoden wrote: »

My main point was that people whose income was not effected have been able to save hardcore for months as there's nothing else to do.

Fully agree with this, there will be people with bigger deposits than planned at this stage.

Personally I was already saving and when we were in our deepest "lockdown" Mar-Jun I definitely had lots of excess, which I used to pay down my debt so now I'm debt free too. However, for July/Aug/Sept my spending increased with increased availability of restaurants, staycationing (all on a reasonable budget of course). So on my salary anyway the heavy saving was definitely there Mar-Jun but my spending has returned to closer to where it was. There are definitely some things that we still save on - lunches etc as we are WFH, and our weekly shops are very well planned now so that also helps.

TL;DR: The average mortgage saver probably put away a few extra thousand in Mar-Jun but maybe not as much extra since then, IMO.

Edit: Of course, we also could have chosen to stay under "lockdown" conditions ourselves and not leave our home for months, not get any restaurant food, but it's been a terrible year and we're saving a good bit already so we want to enjoy living a little bit too where possible.

PropQueries

stefanovich wrote: »

I know of people who are working single parents that pay negative tax.

As are many civil servants:

"Simon Coveney has said there could be as many people in his department on the Working Family Payment as in the whole of the Defence Forces."

Link to article in Irish Independent here: https://www.independent.ie/irish-news/politics/coveney-many-civil-servants-in-my-department-are-on-family-income-top-up-like-members-of-defence-forces-39601376.html

The question is how long the state can continue borrowing money to keep topping up wages and paying relatively high salaries to many of our civil and public sector workers.

The state appears to have decided that housing costs should be alligned to the wages that are paid to the 229,957 people who work for multinationals in Ireland (most I would assume are already home owners). They then borrow money year in, year out to try provide similar salaries to the civil and public sector workers.

It's an insane strategy that will (not probably) end in tears for the housing market.

fliball123

brisan wrote: »

The argument was that even when working they would not be in a position to buy property ,which obviously is not true .
So the argument was low paid workers losing their jobs has no effect on the property market which is patently untrue

I think the argument is this that low paid workers were the ones mostly hit as in put on covid payments therefore I don't think any bank will look at a worker on covid payments when trying to get a mortgage ergo any one on those payments looking to get a mortgage would be locked out of buying so it does have an impact on the property market on the demand side

but the real questions to be asked are
how long will that last ??
How many low paid workers went looking for a mortgage??

fliball123

HotMama89 wrote: »

I think there is very little incentive for people to trade up as well for example HTB is only for first time buyer new builds so to trade up the same house is costing me 30k more than a ftb.

People trading up are limited to second hand houses and there's no incentive for developers to builder bigger houses more suited to people trading up.

In my area every new house built are mostly starter homes which are smaller than my own.

Hows about being locked in a sh1tty apartment for the lockdown or a small house with no garden. While the budget gave them nothing you can bet a lot of people living in the the above conditions would of longed to trade up during lockdown and now we are looking at a potential lock down again. There will be people trading up without doubt over the next 12 months

Bass Reeves

brisan wrote: »

The argument was that even when working they would not be in a position to buy property ,which obviously is not true .
So the argument was low paid workers losing their jobs has no effect on the property market which is patently untrue

It not that they do not have an effect but there effect is minimal. A couple with a combined income of 60k will get mortgage approval for 210k even with an exemption bringing them to 250 max they have little effect on the market. More than likely they are looking at social or affordable housing in Dublin.

The reality is that it take a couple with a combined income 80k or above That are mostly in the house hunting market. Most people form relationships with in there own socio economic groups. The reality that a good porportion of people working in the hospitality industry are students.and foreign nationals. The owners of these businesses tend to be already established individuals who already have houses if there own.

A lot within the hospitality industry are part time and only now are starting to be worse off on the PUP.

If we take 70-80k as a base for mortgages that effect, yes there are some below that but not a substantial amount then you can should be able to understand why the market is fairly stable. Even a couple looking for a loan where one is on minimum pay means that the other must be on a wage if 50k+ minimum. This would be a fairly established professional with a bar wench as a partner. They would have met outside there socio-economic group and would not be that common to factor into the equation.

Dwarf.Shortage

Bass Reeves wrote: »

It not that they do not have an effect but there effect is minimal. A couple with a combined income of 60k will get mortgage approval for 210k even with an exemption bringing them to 250 max they have little effect on the market. More than likely they are looking at social or affordable housing in Dublin.

The reality is that it take a couple with a combined income 80k or above That are mostly in the house hunting market. Most people form relationships with in there own socio economic groups. The reality that a good porportion of people working in the hospitality industry are students.and foreign nationals. The owners of these businesses tend to be already established individuals who already have houses if there own.

A lot within the hospitality industry are part time and only now are starting to be worse off on the PUP.

If we take 70-80k as a base for mortgages that effect, yes there are some below that but not a substantial amount then you can should be able to understand why the market is fairly stable. Even a couple looking for a loan where one is on minimum pay means that the other must be on a wage if 50k+ minimum. This would be a fairly established professional with a bar wench as a partner. They would have met outside there socio-economic group and would not be that common to factor into the equation.

She could be the high earning half either, it's not 1970.

Bass Reeves

Dwarf.Shortage wrote: »

She could be the high earning half either, it's not 1970.

That even less likly, they could also be a same sex couple which would as likely as either of the other combinations.