2021 Irish Property Market chat - mod warnings post 1

Thomasirl123 · 23-04-2021 03:58PM

fliball123 wrote: »

There's the post I wrote

Median net household income 35k
Median house price 270k
That's makes house prices 7.7 times income.
Even if the young were saving every cent they earn, there's little doubt in my mind its more difficult to buy now.

https://www.google.com/amp/s/www.thejournal.ie/average-house-prices-ireland-report-5303447-Dec2020/%3famp=1

https://www.google.com/amp/s/www.irishtimes.com/news/politics/election-2020-fact-check-is-the-average-income-really-47-000-1.4155272%3fmode=amp

Cyrus · 23-04-2021 04:01PM

Thomasirl123 wrote: »

Median net household income 35k
Median house price 270k
That's makes house prices 7.7 times income.
Even if the young were saving every cent they earn, there's little doubt in my mind its more difficult to buy now.

https://www.google.com/amp/s/www.thejournal.ie/average-house-prices-ireland-report-5303447-Dec2020/%3famp=1

https://www.google.com/amp/s/www.irishtimes.com/news/politics/election-2020-fact-check-is-the-average-income-really-47-000-1.4155272%3fmode=amp

you borrow basis your gross income not your net.

which ill admit is a bit counter intuitive but i dont make the rules!

flexcon · 23-04-2021 04:08PM

Random stranger advice time

First time buyer.

Fix it for 7 years or 5? Thinking 7 at 2.65% rather than 5 at 2.5%

fliball123 · 23-04-2021 04:09PM

Thomasirl123 wrote: »

Median net household income 35k
Median house price 270k
That's makes house prices 7.7 times income.
Even if the young were saving every cent they earn, there's little doubt in my mind its more difficult to buy now.

https://www.google.com/amp/s/www.thejournal.ie/average-house-prices-ireland-report-5303447-Dec2020/%3famp=1

https://www.google.com/amp/s/www.irishtimes.com/news/politics/election-2020-fact-check-is-the-average-income-really-47-000-1.4155272%3fmode=amp

The median salary I gave you is for 2021 yours is for 2020 and is the household income. I also gave you the median not the average house price for the last 12 months.

So are we still in the dark ages where the women folk stay at home and mind the childer and do the whole house wifey thing? For the last 30 years people have bought a house as a couple (this is the accepted social norm) and its well affordable for two people on the median income looking to buy a house at the median cost currently. The facts and figures are there in the post. Like I have said on here ad nauseam if you want to live in a highly sought after location such as Dublin you will need to pay a premium

Its hard if your single to buy a place but it has always been this way. I wouldnt have been able to buy as a single person

It was hard to buy when I bought and I spent 3.5 years saving hard not going out, using public transport instead of having a car, making my lunch and bringing it in with. No holidays no Friday night beers with the lads. Look its never been easy to save and I am not saying its easy for anyone now to save and get a mortgage either.

fliball123 · 23-04-2021 04:14PM

flexcon wrote: »

Random stranger advice time

First time buyer.

Fix it for 7 years or 5? Thinking 7 at 2.65% rather than 5 at 2.5%

Talk about roll of the dice .. But if your someone who can save a good whack in the next 5 years might be better going with the 5 years and then throwing what you saved off the mortgage before the new interest rates kick in and in 5 years I think there will be an increase in interest rates. But good luck with it.

hometruths · 23-04-2021 04:20PM

flexcon wrote: »

Random stranger advice time

First time buyer.

Fix it for 7 years or 5? Thinking 7 at 2.65% rather than 5 at 2.5%

Fix for 7 if it were me. Interest rates will rise within 3 years IMO.

tobsey · 23-04-2021 04:21PM

Thomasirl123 wrote: »

Can I see the data for this? I'm sure there's other things that can be inferred from it.

But I'd guess you're comparing apples with oranges.

From a NERI paper:
In 1987, a house cost an average of 3.1 times a young couple's net income, or the amount left after taxes were paid. At the height of the boom, in 2007, it had increased to 6.3 times, and stood at 4.1 times in 2014, the most recent year for which figures are available.

Interest rates in 1987 were in double digits. Starting the year at 13%! So the total amount payable versus income and the monthly repayments probably weren't that different than 2007.

DataDude · 23-04-2021 04:23PM

schmittel wrote: »

Fix for 7 if it were me. Interest rates will rise within 3 years IMO.

Worth considering if you have any chance of getting down to a lower LTV within a certain period. My plan is to fix for 3 at 2.1%ish. Hopefully save enough in mean time to get down below 60% LTV and then move to Avant which is 1.95% for 5 years. There'd need to be a very sharp upward move in interest rates for that plan to not work out better than fixing for 7 years.

60% LTV is just one catch point, there are others at 80% etc.

fliball123 · 23-04-2021 04:25PM

DataDude wrote: »

Worth considering if you have any chance of getting down to a lower LTV within a certain period. My plan is to fix for 3 at 2.1%ish. Hopefully save enough in mean time to get down below 60% LTV and then move to Avant which is 1.95% for 5 years. There'd need to be a very sharp upward move in interest rates for that plan to not work out better than fixing for 7 years.

60% LTV is just one catch point, there are others at 80% etc.

Thats why I was saying the 5 years bit of room to maneuver and security

Cal4567 · 23-04-2021 04:27PM

PropQueries wrote: »

I've come to the conclusion that the government and their advisors actually fully understand what they're doing.

They have known of the waiting list problem since 2015. Did they build many houses to resolve it? No. The waiting list wasn't going to magically disappear. The only logical end-game would have been to buy/lease/rent houses from the private market.

Otherwise, we have to draw the conclusion that the state intended to have tens of thousands of families literally homeless by 2020 and I don't believe they planned on that which means the current buying/leasing/renting from the private market was most likely planned several years ago IMO

I think many of us may have missed that one and well done on them getting away with it IMO

I think the government/senior civil servants have relied on the private market initially, landlords both small (while at the same time making it more and more difficult for these landlords to operate - bizarre) and increasingly large (providing tax relief so institutional investors would enter the market in the first place). Social housing tenants wouldn't be natural FG voters whereas existing home owners would be, so they've looked after that important voting group.

They brought in a vacant site tax but it has loopholes so is not effective. Policies like that appear to be only enacted as a sop to criticism, which has resulted in having to play catch up, and not that successfully. They never really had a solid base to work with for starters- local authorities that have not been in any position to develop to a size expected, and many property professionals have serious concerns with their ability in any case; approved housing bodies, while have progressed more and more to the centre stage, are still minor players in the overall picture. They are getting bigger but not at the speed and scale we need on their own.

The biggest shock to me was for government not to fully appreciate from what has been happening in other western cities, since even before the crash and that is how events have developed preventing many middle income earners to be able to access their own housing. If they realise it now, its a bit too late. It does sound like a 'I'm all right Jack, mentality' has set in.

I'd not just be questioning the capability of politicians but also those advising them. Government for the people? Not really. Only some of them. Those who already have property or properties in their existing family ownership.

hometruths · 23-04-2021 04:36PM

DataDude wrote: »

Worth considering if you have any chance of getting down to a lower LTV within a certain period. My plan is to fix for 3 at 2.1%ish. Hopefully save enough in mean time to get down below 60% LTV and then move to Avant which is 1.95% for 5 years. There'd need to be a very sharp upward move in interest rates for that plan to not work out better than fixing for 7 years.

60% LTV is just one catch point, there are others at 80% etc.

Worth considering if you can do it! For sure in your position as a very high earner that makes sense, but I’d say you’re an outlier in having the ability to save enough to get under 60% LTV in three years.

Also worth considering your outlook for the market. If your outlook is more of the same, your plan is sound.

My outlook is that an increase in interest rates might coincide with a decrease in prices, and that 60% LTV calculation might look very different quite quickly.

I’m not so sure the risk/reward is as favorably skewed toward fixing for three years as you suggest.

PropQueries · 23-04-2021 04:38PM

Cal4567 wrote: »

I think the government/senior civil servants have relied on the private market initially, landlords both small (while at the same time making it more and more difficult for these landlords to operate - bizarre) and increasingly large (providing tax relief so institutional investors would enter the market in the first place). Social housing tenants wouldn't be natural FG voters whereas existing home owners would be, so they've looked after that important voting group.

They brought in a vacant site tax but it has loopholes so is not effective. Policies like that appear to be only enacted as a sop to criticism, which has resulted in having to play catch up, and not that successfully. They never really had a solid base to work with for starters- local authorities that have not been in any position to develop to a size expected, and many property professionals have serious concerns with their ability in any case; approved housing bodies, while have progressed more and more to the centre stage, are still minor players in the overall picture. They are getting bigger but not at the speed and scale we need on their own.

The biggest shock to me was not to fully appreciate from what has been happening in other western cities, since even before the crash and that is how events have developed preventing many middle income earners to be able to access their own housing. If they realise it now, its a bit too late. It does sound like a 'I'm all right Jack, mentality' has set in.

I'd not just be questioning the capability of politicians but also those advising them. Government for the people? Not really. Only some of them. Those who already have property or properties in their existing family ownership.

I don't know. On one side they knew the housing waiting list they would have to deal with in 2021 at least back in 2015. They built very few homes to deal with it. Then, on the other side you had the funds etc. buying up literally hundreds of billions in 'distressed assets' in a country which even today, still has less than 5 million people.

While it may be a bit of a far fetched theory, it's not so far fetched to believe that the state and their advisors gave the funds the nod that if they bail us out back then, by purchasing all those 'distressed assets' from the banks, the return will be exponential, guaranteed and this is how we will pay you back.

Just a theory... so far...

DataDude · 23-04-2021 04:44PM

schmittel wrote: »

Worth considering if you can do it! For sure in your position as a very high earner that makes sense, but I’d say you’re an outlier in having the ability to save enough to get under 60% LTV in three years.

Also worth considering your outlook for the market. If your outlook is more of the same, your plan is sound.

My outlook is that an increase in interest rates might coincide with a decrease in prices, and that 60% LTV calculation might look very different quite quickly.

I’m not so sure the risk/reward is as favorably skewed toward fixing for three years as you suggest.

Yep true, although for many it might be possible to get from say 85% to 79% (or similar) over 3 years.

There is risk of course, and fixing longer is the "safer bet". That said forward rates indicate that "lower for longer" is the market expectation for interest rates (although there has been a tick upwards in recent months). Not that that means it will definitely happen of course!

If your base case is a rapid increase in interest rates and large decrease in prices, I suspect holding fire would be a better bet than fixing for 5 years!

hometruths · 23-04-2021 05:10PM

DataDude wrote: »

Yep true, although for many it might be possible to get from say 85% to 79% (or similar) over 3 years.

There is risk of course, and fixing longer is the "safer bet". That said forward rates indicate that "lower for longer" is the market expectation for interest rates (although there has been a tick upwards in recent months). Not that that means it will definitely happen of course!

The risk/reward also comes down to what is the actual saving per month? Again I think you’re in a slightly unusual position where it makes sense because your mortgage will be much higher than average FTB. If you can get down to sub 60% and shave off 50 odd basis points on your rate, then the savings are meaningful.

Consider the average FTB borrowing 300k starting at 90% LTV hoping to get to 80% in 3 years time to save 15 odd basis points, and suddenly you have to ask yourself are the savings worth the risk?

DataDude wrote: »

If your base case is a rapid increase in interest rates and large decrease in prices, I suspect holding fire would be a better bet than fixing for 5 years!

Not necessarily my base case just what do I think Considering the balance of probabilities - if interest rates are to move meaningfully, are they likely to move up or down? Up is my belief.

If this occurs I’ll be happy I fixed, and not worried about LTV moving in wrong direction.

If they don’t move meaningfully not losing too much by fixing for longer.

If I am wrong and they move down, value of house will likely increase, my LTV will fall and I’ll be ok with that outcome too.

Hence the risk/reward comment!

Edit - sorry just noticed you’re not hoping to save anything like 50 basis points. In that case I think you’re nuts. You should fix for 7 too!!

Cal4567 · 23-04-2021 05:44PM

I believe it was more of a case of wanting the wider property world to come in and help make Ireland then a sort of world leader for investment, this time for property, as distinct from just financial (London and Frankfurt leading on that) which would give a boost to a flagging property and construction industry, still pretty much having to shake off the disaster of the crash. A help to boost also the wider economy, leading to better tax returns etc etc.

What quickly transpired in the minds of the wider financial property world, was a quick realization that the yields for just such an investment were just not quite good but probably one of the best on offer in a marketplace across western economies of more modest returns. All this as well before Brexit. Post the 2016 Brexit vote, Dublin found itself in an even more attractive position for companies wishing to locate from London. OK, there now hasn't been a full scale departure from London, but don't forget through all this Ireland inc. still had also its super douper attractive tax regime. Ireland, take that to mean Dublin, ticked many boxes for institutional investors who are quick to move in quickly, invest, ride along with the upsurge, and then leave, selling on. Could be a 5 or 10 year strategy. Just move the money around where you can sniff the best returns. The trick is to exploit this quickly. 2/3 years later when we are all talking about in in the media and on forums such as this, there's a second or even a third wave of investors, piggy backing onto this.

Such is the power of those with very deep pockets.

DataDude · 23-04-2021 06:22PM

schmittel wrote: »

Edit - sorry just noticed you’re not hoping to save anything like 50 basis points. In that case I think you’re nuts. You should fix for 7 too!!

The differences are much higher than 50 basis points. The lowest 7 year fixed I'm aware of is 2.95% (vs 2.2% for 5 year, much lower for AvantCard but they require 60% LTV). With cashback the 3 years effectively work out around 2%.

Overall, I agree with your sentiment that fixing longer is safer and perhaps wise for some people to avoid the risk.

That said, having run the numbers in detail and tried various interest rate outcomes, for me it would take a very sudden and sharp rise in rates for fixing 3 years, then 5years to end up working out more expensive than fixing for 7 off the bat given the 70+ bps difference in comparable rates plus the potential to move into a lower LTV bracket in the meantime!

hometruths · 23-04-2021 06:28PM

DataDude wrote: »

The differences are much higher than 50 basis points. The lowest 7 year fixed I'm aware of is 2.95% (vs 2.2% for 5 year, much lower for AvantCard but they require 60% LTV). With cashback the 3 years effectively work out around 2%.

Overall, I agree with your sentiment that fixing longer is safer and perhaps wise for some people to avoid the risk.

That said, having run the numbers in detail and tried various interest rate outcomes, for me it would take a very sudden and sharp rise in rates for fixing 3 years, then 5years to end up working out more expensive than fixing for 7 off the bat given the 70+ bps difference in comparable rates plus the potential to move into a lower LTV bracket in the meantime!

I was thinking of you fixing for 2.1ish and moving to 1.95% after three years as per your post, but whatever the rate, my "advice" to you was slightly tongue in cheek, I have no doubt you've considered it from every angle!

23-04-2021 08:14PM

Mic 1972 wrote: »

Printing money = Inflation

some people believe we are in deflation

The man was getting 600 per week and due with Covid he went to Covid 350 per week payment.
The payment been paid by government by freshly printed ECB money
His incomes went down 250 per week or 1K per month
His rent did not changed his car loan still 400 per month
He was on Covid payment 4 months last year and are 4 months this year what is Minus 8K of his incomes
Were you see inflation ? When poor guy got finally sell his car because could not afford loan and bought bicycle
He does not have pay car insurance,motor tax and because his ability to travel are reduced he does not go for weekend fun to another towns were he was spending time in cafe and restaraunts
He will not go for holiday to Spain and he started bring home made sandwiches to work when before he was buying them in local shop
Guys I cant understand were you see inflation when most people lost half of them incomes even getting freshly printed money !

Cyrus · 23-04-2021 08:26PM

DataDude wrote: »

The differences are much higher than 50 basis points. The lowest 7 year fixed I'm aware of is 2.95% (vs 2.2% for 5 year, much lower for AvantCard but they require 60% LTV). With cashback the 3 years effectively work out around 2%.

Overall, I agree with your sentiment that fixing longer is safer and perhaps wise for some people to avoid the risk.

That said, having run the numbers in detail and tried various interest rate outcomes, for me it would take a very sudden and sharp rise in rates for fixing 3 years, then 5years to end up working out more expensive than fixing for 7 off the bat given the 70+ bps difference in comparable rates plus the potential to move into a lower LTV bracket in the meantime!

What I did was take a couple of cash backs ( switched from both as quick as I could ) then fixed with UB who allow a 10 percent annual capital overpayment , next stop will probably be Avant.

If the cash backs are still going try get them, it’s a gift and one of the only advantages of a large mortgage.

DataDude · 23-04-2021 09:14PM

Cyrus wrote: »

What I did was take a couple of cash backs ( switched from both as quick as I could ) then fixed with UB who allow a 10 percent annual capital overpayment , next stop will probably be Avant.

If the cash backs are still going try get them, it’s a gift and one of the only advantages of a large mortgage.

Yeah it’s definitely a very viable option. Can work out very well if done right!

PTSB is the most attractive cashback at the minute. Can stay with them 3 years and it’s very low effective rate. The other ones, the rates are so bad you really need to get off them within a year or so to make it worthwhile. Will explore whats available when the 3 years with PTSB are up!

Hubertj · 23-04-2021 09:21PM

DataDude wrote: »

Yeah it’s definitely a very viable option. Can work out very well if done right!

PTSB is the most attractive cashback at the minute. Can stay with them 3 years and it’s very low effective rate. The other ones, the rates are so bad you really need to get off them within a year or so to make it worthwhile. Will explore whats available when the 3 years with PTSB are up!

Thank you, this is very insightful. My wife started looking at Avant the other day as we are within the LTV.. I don’t keep on top of this sh*t at all.

Wanderer78 · 23-04-2021 09:35PM

Revolution 1917 wrote:

The man was getting 600 per week and due with Covid he went to Covid 350 per week payment. The payment been paid by government by freshly printed ECB money His incomes went down 250 per week or 1K per month His rent did not changed his car loan still 400 per month He was on Covid payment 4 months last year and are 4 months this year what is Minus 8K of his incomes Were you see inflation ? When poor guy got finally sell his car because could not afford loan and bought bicycle He does not have pay car insurance,motor tax and because his ability to travel are reduced he does not go for weekend fun to another towns were he was spending time in cafe and restaraunts He will not go for holiday to Spain and he started bring home made sandwiches to work when before he was buying them in local shop Guys I cant understand were you see inflation when most people lost half of them incomes even getting freshly printed money !

Very few truly understand our modern monetary systems, few realise and accept that the majority of our money supply comes from private sector banks if the form of credit, and the rest comes via central banks and the bond markets. This has in fact only truly lead to asset price inflation, in particular property and land prices, while real world inflation has remained low in comparison, hence our current mess. Its also important to remember, the payment of debt is in fact the destruction of money itself.

Another element of current concern is the reduction of the velocity of the money supply, a functioning economy needs a growing velocity (movement of money, from transaction to transaction), with deposits growing, velocity is falling, this is not good for an economy, and slows economic activities

Cyrus · 23-04-2021 09:37PM

DataDude wrote: »

Yeah it’s definitely a very viable option. Can work out very well if done right!

PTSB is the most attractive cashback at the minute. Can stay with them 3 years and it’s very low effective rate. The other ones, the rates are so bad you really need to get off them within a year or so to make it worthwhile. Will explore whats available when the 3 years with PTSB are up!

Would it be worth doing one of the others for a year and then switching to ptsb or does the math not work ?

Cantstandsya · 23-04-2021 09:52PM

Do people think the current frenzy will end with prices falling back down to pre-Covid levels or simply stabilising at the top of the curve they're currently on?

Will any post-lockdown supply surge be greater than the pent up demand?

23-04-2021 09:55PM

Wanderer78 wrote: »

Very few truly understand our modern monetary systems, few realise and accept that the majority of our money supply comes from private sector banks if the form of credit, and the rest comes via central banks and the bond markets. This has in fact only truly lead to asset price inflation, in particular property and land prices, while real world inflation has remained low in comparison, hence our current mess. Its also important to remember, the payment of debt is in fact the destruction of money itself.

Another element of current concern is the reduction of the velocity of the money supply, a functioning economy needs a growing velocity (movement of money, from transaction to transaction), with deposits growing, velocity is falling, this is not good for an economy, and slows economic activities

The problem is we entered into Covid with deflation.
Deposits growing but nod spending.

DataDude · 23-04-2021 10:02PM

Cyrus wrote: »

Would it be worth doing one of the others for a year and then switching to ptsb or does the math not work ?

The maths absolutely works. But I’m a bit paranoid. Possible my partner stops working in the next year. Potential banks tighten their lending criteria of economic impacts of COVID are worse than expected. Maybe property values fall leaving us in negative equity. Some combination of above 3 factors might make it difficult to remortgage in 12 months and we’d be stuck on some insane rate with Bank of Ireland. At least the 3 years fixed with PTSB gives us a chance to eat into the principal and reduce risk of not being able to switch in future.

Probably being overly negative and theoretically your approach is the best one.

Cyrus · 23-04-2021 10:04PM

DataDude wrote: »

The maths absolutely works. But I’m a bit paranoid. Possible my partner stops working in the next year. Potential banks tighten their lending criteria of economic impacts of COVID are worse than expected. Maybe property values fall leaving us in negative equity. Some combination of above 3 factors might make it difficult to remortgage in 12 months and we’d be stuck on some insane rate with Bank of Ireland. At least the 3 years fixed with PTSB gives us a chance to eat into the principal and reduce risk of not being able to switch in future.

Probably being overly negative and theoretically your approach is the best one.

I hear you , we had a lucky escape in that regard actually now that I look back on it but all’s well that ends well!

23-04-2021 10:14PM

Cantstandsya wrote: »

Do people think the current frenzy will end with prices falling back down to pre-Covid levels or simply stabilising at the top of the curve they're currently on?

Will any post-lockdown supply surge be greater than the pent up demand?

Prices will falling

Lets look at property market as on car boot sale
On very morning first coming those who looking for very cheap stuff with plenty cash for it
They buy stuff for them self to make money on resale after
After them coming those who buy stuff at higher price for them self
When they leave sellers put prices down to sell the rest
Property market are the same as car boot sale

The amount of money adjust prices on market not amount of buyers or sellers

If we look to 2004-2007 property market we will see the same
When amount of buyers was maximum as on morning on car boot sale the banks was giving 70 per cent of mortgage

When there was less they was giving 100 per cent mortgage

And when nobody left banks gave 110 per cent of mortgage

When buyers left markets we had recession

Please stop talk about supply.Builders will not go on doll they will continue build ! Because builders cant do anything else !

Well,we have freshly printed money but sadly too much people lost a lot more money than they got from ECB

fliball123 · 23-04-2021 10:21PM

Revolution 1917 wrote: »

Prices will falling

Lets look at property market as on car boot sale
On very morning first coming those who looking for very cheap stuff with plenty cash for it
They buy stuff for them self to make money on resale after
After them coming those who buy stuff at higher price for them self
When they leave sellers put prices down to sell the rest
Property market are the same as car boot sale

The amount of money adjust prices on market not amount of buyers or sellers

If we look to 2004-2007 property market we will see the same
When amount of buyers was maximum as on morning on car boot sale the banks was giving 70 per cent of mortgage

When there was less they was giving 100 per cent mortgage

And when nobody left banks gave 110 per cent of mortgage

When buyers left markets we had recession

Please stop talk about supply.Builders will not go on doll they will continue build ! Because builders cant do anything else !

Well,we have freshly printed money but sadly too much people lost a lot more money than they got from ECB

amazing analogy where to start maybe just 2008 and 2021 are completely different with regards to almost everything. This argument has been done to death and I have not the energy to go through it all again. You cant compare 2008 and 2021 the supply of property available in the run int to both years alone is so different that there is no way they will play out the same

23-04-2021 10:27PM

fliball123 wrote: »

amazing analogy where to start maybe just 2008 and 2021 are completely different with regards to almost everything. This argument has been done to death and I have not the energy to go through it all again. You cant compare 2008 and 2021 the supply of property available in the run int to both years alone is so different that there is no way they will play out the same

No,we will not play the same
Banks are leaving Ireland and they not gonna give 110 per cent of mortgage anymore
The question is who will buy property with 20 per cent deposit when no buyers on car boot sale left and sellers due with lost income has to sell property .
And sure who will give mortgage when banks already leaving or closing down branches because no reps possible.

2021 Irish Property Market chat - *mod warnings post 1*

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2021 Irish Property Market chat - mod warnings post 1