Irish Property Market chat II - *read mod note post #1 before posting*

hard to believe it but some of the mortgage lenders here are almost up to 6% already with more rises on the way:

Finance Ireland is increasing its standard variable rate by 1 percentage point with effect from March 16 next.

The will mean the variable rate at Finance Ireland will be between 5.75pc and 6.15pc, depending on the loan to value.

Five successive hikes have added up to €400 a month to a €330,000 tracker mortgage, with a further rise next month to add €88 more.

But more ECB rate rises are on the cards.

Alright saying that but a 400k mortgage is a massive mortgage. Particularly when the general cost of living is increasing and wages on a lot of sectors aren't. 3.5 k a year is a lot of money. You would need to earn 6 odd k per annum extra to cover that cost for your net wages. Ultimately though I generally agree, it's the lack of supply that will continue to keep prices relatively static with potential small decreases not necessarily interest rate rises.

Either way housing continues to be a mess, for multiple reasons. Government policy in some area goes completely against ECB policy .

You do realise that every developer needs finance to build…it’s not like rate hikes only impact mortgage holders. A major cost to any development is Finance cost which has increased significantly with the rate hikes

its definitely worse this year but everyone’s situation is different. Generally though, we are selling a lot of lay offs (which we didn’t last year,) which will inevitably have an effect on the housing market.

from someone who works in tech myself, I have been reluctant to buy (first time,) I’ve a lot of savings but people need to remember that Ireland is a tech hub. 90% of the people employed in this sector are serving other countries (UK making up most of that,) to which their economy is in ruins. When tech companies need to chop it’ll continue to happen in dublin

Finance Ireland is a non bank lender if you read the article 80% of its lending lady year was for fixed rates of ten years. A bit of little to see here. Most trackers are 15+years old, this is pointed out again and again. 15-years ago 330k would have been a very substantial loan most would have been over 25 years max probably nearly half the loan repaid now. People who own a house 15-20 years are usually well set up at this stage ya they will cut back, probably not change the car this year, or maybe cut out a few weekends away. They are after ten years of very low repayments.

Teacher, Garda, Nurse or any public servant have got a 5-6% pay increase.

Take two of these earning 40k each lady year they could borrowed 280k@ 3.5 times income

This year after the pay increase the 40k is now 42.6k, give them an annual salary increment of 900 each and you have an income of 43.5 each. This year at 4 times income they can nearly borrow 350k.

Friends of my eldest lad young couple with a child paying 1400/month in rent for last few years were waiting and waiting. Bit the bullet and managed to get it sorted before Christmas borrowed 3.5 times income over 35 years ( 280k) repayments are less than 1k/ month 5 year fixed.

Believe me wages going up lot does not compensate for these interest rate rises.

Say family joint income 100k and borrowing 400k at 4x to buy 440k house.

On 400k mortgage if rate goes from 2.5% last year to 5.5% now that is 12k pa. On higher tax rate need 24k gross income rise to cover that. Unlikely got 24% increase in family income.

Wage rises will not compensate for mortgage rates going over 5%. Will be price correction.

It's the stress tests for new lending that will be interesting. If new business rates get to 4% the stressed rate will be closer to 6%. Hard to see the level of allowed lending hold up at the levels seen over the previous 18 months. No doubt the gov will expand the subsidies or the shared equity scheme to try bridge the gaps.

Outside Dublin down in the Limerick city area

Al you need do with a stress test is put the loan over 35 years of you are under 30, you might even be able to push it to nearly 40 years.

The defacto lending metrics are 4X wages

The rest of the country doesn't exist for Dubs clearly.... He made a point that the mortgage is cheaper than the rent and he isn't wrong. Doesn't matter where you go the mortgage is cheaper and will be for a while to come. If you left your dublin centric view behind for two minutes you would find that Athboy and Rathangan both offer houses for the prices you mentioned within 40 minutes drive of the city

I can tell you from working in the industry 12+ years in senior management that Ireland is used as a hub to house employees to serve EMEA (not just as a tax haven.)

With regards to tech lay offs in dublin it’s important that we consider the economy as a whole across Europe, Middle East and Africa. Irish employees in comparison to UK for example as massively underpaid (cost of living considered) to serve these regions with most of the exec level decision making happening out of London.

Tech companies expected a bounce back in 2023 but again speaking from experience (not to sound like a d*ck) this is not looking likely. The first 1.5 months of 2023 are showing -26% YOY as a whole in tech sector generally speaking. Prior to covid it was consistently 15-20% YOY growth and 30-35% YOY Growth (in terms of revenue) from 2020-2022 resulting in massive overhiring.

Not to go off topic but as mentioned, these tech companies generally have senior decision making power in London. They are the ones making the decisions on who and where heads should be chopped, post Brexit (hopefully a coincidence) there is massive unease between regions and not just politically - you will see them lay off people in dublin quicker than UK.

To date, most lay offs have targeted roles in HR, finance, recruitment and basically any back office operations that can be streamlined. Sales has yet to be hit as they look to boost revenue, however, hiring more sales people (which is mainly what Dublin is used for) won’t fix the issue. They will be next to go and the fall out will be much worse than what we have seen so far re: tech lay offs.

Non bank lender so they don't have the deposits to offset the borrowing interest rates.

It would be a mistake to discount tech layoffs. What proportion of the market can afford current prices and nose bleed rents, I would suspect that quiet alot of that category would be in big tech.

I agree that redundancies and quick new job may result in a short buying boost but would imagine incomes for future sales rents would be reset at lower levels