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Housing bubble starting to pop?

SimpleSam06

Here in Galway, one of the most expensive places to buy property in Ireland, there are still a lot of real estate agents trying to move 3 bedroom houses at €450,000 or so, but Remax property about a week ago was advertising three bedroom houses in good areas for €320,000, or in a couple of cases, €250,000.

I've been looking at property around town for the last six months, and I have to say this is the first time I have seen property anywhere under the 300k mark. Now with that said, there are still places going for looney tunes money, a two bedroom penthouse apartment for 1.4 million last week, but thats getting pretty rare (probably why it made the news).

Can this be the beginning of the end of the property bubble? And does this mean FTB actually have a chance over the coming year? Should first timers wait until the prices bottom out?

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Raskolnikov

ronbyrne2005 wrote:

A year ago the builder of my housing estate here in glasnevin drove in to have a look at the estate,he got talking to one of my neighbours and revealed he lost a fortune on building the estate back in 88/89, this can and IMO will happen again in Dublin. Prices for building and land will fall back as market forces dictate.

If there is a downturn, the builders and developers won't be in the same situation they were back in 1988-89 (the builder of
my estate also went bankrupt incidently). Why is
this the case? The primary reason is buying off the plans. Not only is the buyer taking the risk of a downturn in the market,
but the buyer is paying a vastly inflated price to take this risk. Not only that, but the builders have developed a couple
more tricks in order to squeeze even more cash from buyers. Auctioning off-the-plan developments and sealed envelope bids are
not uncommon. Yet, buyers are falling over themselves to buy, even now.

Who's going to suffer in the event of a downturn? Primarily, FTB's of course. The greater that this bubble inflates, the greater
the fallout will be.

chump

seamus wrote:

Even if that excess €600/month is put into a high-yield savings account (€72,000 over ten years), it still wouldn't match the return on investment yielded from a property.

OK

As far as I can work out
They got a €350k mortgage.
Calculations via http://www.jeacle.ie/mortgage/ would suggest this is a 35year mortgage @ ~ 4% (ie, 3% ECB + 1%)
This is the scenario that gives a €1,549.71 monthly repayment.

If this is the case, at the end of the 10th year, they will have paid less than €60k off the principal.
Now on top of that, we have interest rate rises, we have stamp duty, we have selling and buying costs, inflation,
On the flip side we have rent increases, inflation, etc.

We also have the very real threat that there will be a decline in house prices (in real terms) within the next few years.

It doesn't take much for the argument TO buy to become the argument NOT TO buy.

JimmySmith

coolhandluke wrote:

Interesting but i don't really see what your point is,your brother can afford to buy his own house but so what.350,000 for a 2 bed house,crazy !.You say his main reason is because "we are sick of sharing" i obviously don't know where he lives but i know loads of properties in my area asking for 350,000 but only renting for E900 for the entire house,so why didn't he just move to a location where they would be on their own ?

I think you dont want to see the point so i'll spell it out for you.

The arguement i often see bandied about here is that houses are not affordable anymore. This example shows that they are very, very affordable. In fact if they felt like it and had another deposit they could afford ANOTHER house

and still have enough money after they mortgage to live comfortably.
They dont feel they are p1ssing money up against a wall, and neither do i. You could also say a person renting a nice apt in the city centre for €400pm is p1ssing money up against the wall when they could be renting in Fatima mansions for €100 pm.

My bro and his girlfriend are fairly typical of anyone around the age of 30 or so that i know. They are a couple, renting and have decided they want a home of their own, where they want it. In fact they are earning less than most 30 year olds that i know of, due to about 5 or 6 years travelling the world, which i cant say was a bad thing. He earns 35K, she earns about 30K (hardly huge wages for 30 year olds). They dont want to share anymore, be it wioth another renter or their landlord. And you are always shareing with your landlord, even if you are renting the house on your own.

Its just a sad fact that single persons on less than €30K cant buy a home on their own anymore - ever. But there is a massive supply of couples, siblings, friends who will buy together. And a house is ridiculously affordable to them.

JimmySmith

chump wrote:

OK

As far as I can work out
They got a €350k mortgage.
Calculations via http://www.jeacle.ie/mortgage/ would suggest this is a 35year mortgage @ ~ 4% (ie, 3% ECB + 1%)
This is the scenario that gives a €1,549.71 monthly repayment.

If this is the case, at the end of the 10th year, they will have paid less than €60k off the principal.
Now on top of that, we have interest rate rises, we have stamp duty, we have selling and buying costs, inflation,
On the flip side we have rent increases, inflation, etc.

We also have the very real threat that there will be a decline in house prices (in real terms) within the next few years.

It doesn't take much for the argument TO buy to become the argument NOT TO buy.

Your calculations are wildly wrong. Its dangerous to make guesses when doing calculations there. What if i told you they had a deposit? also, what about mortgage interest relief? Would you change your calculations. Your doing the very same thing saying 'We also have the very real threat that there will be a decline in house prices (in real terms) within the next few years.'
You are guessing again.
If houses are as affordable as i have outlined then there is very little risk of a decline in house prices in the next few years.
I know of very few people over 30 could not afford to buy a house with a partner for even €400K. As people get older their earning power increases. Its the way of life.

Does anyone have any figures on what percentage of mortgages taken out this year were 100% mortgages? Very few i would think.

chump

Male 35k p.a ... monthly take-home pay ~ €2400
Female 30k p.a ... monthly take-home pay ~ €2150
Combined €4,550
Less ~ €1,550 on mortgage
___________________________________
Disposable monthly income ~ €3,000
LESS
ESB ~ 60
Gas ~ 60

TV ~ 20
Eircom Landline ~ 0
Mobile ~ 30
Internet ~ 30

Car Insurance ~ 100 (two drivers?)
Car Payments ~ who knows €100

Refuse bill ~ 5
TV Licence ~ 10
Water ~
___________________________________
OK so we'll say necessaties ~= 400
Monthly Income left ~ €2600

It's not that much when you take away food and 'extras' and that's before you look at children. And I'm pretty sure the government doesn't want us to stop producing those...

Oh and I certainly don't think they should be buying a second home anytime soon.

chump

JimmySmith wrote:

Your calculations are wildly wrong. Its dangerous to make guesses when doing calculations there. What if i told you they had a deposit?

What difference does that make? Sure the deposit money in a high-yield savings account earns more than in a non-appreciating home.

JimmySmith wrote:

also, what about mortgage interest relief? Would you change your calculations.

Rent relief?

JimmySmith wrote:

Your doing the very same thing saying 'We also have the very real threat that there will be a decline in house prices (in real terms) within the next few years.'
You are guessing again.

This is the only 'guess', and I said 'in real terms'. We have the IMF, the ERSI, Brian COwen, all at the very least suggesting a levelling off.

JimmySmith wrote:

If houses are as affordable as i have outlined then there is very little risk of a decline in house prices in the next few years.

So you're argument is. 'I believe house is affordable, therefore it will not decline in price' - and I never said it would decline did I? My figures were in response to seamus' simple example that I turned on it's head with the ACTUAL figures.

JimmySmith wrote:

I know of very few people over 30 could not afford to buy a house with a partner for even €400K. As people get older their earning power increases. Its the way of life.

Ditto. But that's not the point.

JimmySmith wrote:

Does anyone have any figures on what percentage of mortgages taken out this year were 100% mortgages? Very few i would think.

Listen someone provided me with a figure of €350k and repayments of €1,500 including recent rate increase. I worked out using that data. Give me different variables and I'll pop em in.

Instead of you providing anything to this argument instead you 'spin'. Give me some figures.

And how are my calculations WILDLY wrong when I provided the variables that I used for all to see? That's a slanderous remark Jimmy, not unlike you though.

davidoco

lomb wrote:

the naysayers said there would be a crash 10 years ago, still waiting! property will cost 20% more in one year, so better to buy now rather than later if loan approved. regardless of potential crashes or stagnation later.

True, here is a snippet from from a Finance Tax Strategy Group note in 1998. The full text is here
http://www.finance.gov.ie/viewdoc.asp?fn=/documents/Publications/tsg/tsg9830.htm

Nationally, house prices rose 18.6% between January and July 1998, around double the 9.1% rate of growth for the same period in 1997.

JimmySmith

Chump,
You're still guessing WILDLY.

Not everyone has Gas. Noone over 30 pays €100 a month on their car insurance unless they are driving F1 cars.

Not everyone bothers with the internet.

Some work overtimne if they feel like it. Even if they dont feel like it.

Regardless rent or buy, you have to pay these bills.

Mortgage interest relief is about €1600 for a couple. Rent relief is about about €660. There is a significant difference there.

I'm sure if they wanted a second house there might be some rent involved there too.

Here are the figures for my brother, as far as i know - they are not exact.

Male 35k p.a ... monthly take-home pay ~ €2400
Female 30k p.a ... monthly take-home pay ~ €2150
Combined €4,550 (not including overtime)

House €350K
Deposit €30K
Morgage 320K = 1394 pm (1527 - 133 interest relief) over 30 years (a 5 year difference from your guess. Thats a whopper)

Money in pockets after mortgage is paid = €3156 Without overtime or annual bonus.

With their disposable income they could double those payments if they want and pay off the mortgage earlier (Pay it off in 11 Years if they kept it doubled for 11 years. Less again with raises and bonuses). In fact i know of noone bar my old man that went the full term of their mortgage.

I'm not even going to bother going into outgoings because i dont know what they are. And if i dont know what my brothers outgoings are you certainly dont. So dont even try.

There are so many options after you get your initial mortgage - to pay off earlier or trade up etc that its pointless trying to pick one.

Anyway, thats neither here nor there.

Back to my point though.

Can we just say that a couple on €65k between them would have about €3k a month left in their pockets after paying the payments on a €350K mortgage - to do with as they please?
In my previous post, I have shown you how affordable the payments on an average mortgage are to the average couple. That is all i wanted to do. Not argue about what someone is Piss1ng up a wall or not.
And i think you'll have to agree. Even the payments on a €400k mortgage is extremly easily affordable to a couple.

chump

JimmySmith wrote:

Chump,
You're still guessing WILDLY.

Not everyone has Gas. Noone over 30 pays €100 a month on their car insurance unless they are driving F1 cars.

Not everyone bothers with the internet.

Some work overtimne if they feel like it. Even if they dont feel like it.

Regardless rent or buy, you have to pay these bills.

Mortgage interest relief is about €1600 for a couple. Rent relief is about about €660. There is a significant difference there.

I'm sure if they wanted a second house there might be some rent involved there too.

Here are the figures for my brother, as far as i know - they are not exact.

Male 35k p.a ... monthly take-home pay ~ €2400
Female 30k p.a ... monthly take-home pay ~ €2150
Combined €4,550 (not including overtime)

House €350K
Deposit €30K
Morgage 320K = 1394 pm (1527 - 133 interest relief) over 30 years (a 5 year difference from your guess. Thats a whopper)

Money in pockets after mortgage is paid = €3156 Without overtime of annual bonus.

With their disposable income they could double those payments if they want and pay off the mortgage earlier (Pay it off in 11 Years if they kept it doubled for 11 years. Less again with raises and bonuses). In fact i know of noone bar my old man that went the full term of their mortgage.

I'm not even going to bother going into outgoing because i dont know what they are. And if i dont know what my brothers outgoings are you certainly dont. So dont even try.

There are so many options after you get your initial mortgage - to pay off earlier or trade up etc that its pointless trying to pick one.

Anyway, thats neither here nor there.

Back to my point though.
In my previous post, I have shown you how affordable the payments on an average mortgage are to the average couple. That is all i wanted to do. Not argue about what someone is Piss1ng up a wall or not.
And i think you'll have to agree. Even the payments on a €400k mortgage is extremly easily affordable to a couple.

You keep using the GUESS phrase. I used a set of figures that fit the criteria provided at the time.

You've now changed the goalposts - that's fair enough, but don't disregard my findings, as they stand up.
I used the outgoings to show VERY MINIMAL outgoings and how they would affect monthly disposable income.
Also have you forgotten that in many couples both parties drive, and pay insurance, even if only have 1 car.

But regarding the point that you're making "I have shown you how affordable the payments on an average mortgage are to the average couple.".

What you have shown is how a dual-income couple with no children can afford a small home that is €50k cheaper than the average price of a home in Dublin.

You seem to take me analysing a general set of figures based somewhat on your brothers scenario as a slight on you. Get it into your head that they are general figures (and unremarkable ones at that) that show that buying a house may not be better than renting.

Cantab.

JimmySmith wrote:

Chump,
You're still guessing WILDLY.

Not everyone has Gas. Noone over 30 pays €100 a month on their car insurance unless they are driving F1 cars.

Not everyone bothers with the internet.

Some work overtimne if they feel like it. Even if they dont feel like it.

Regardless rent or buy, you have to pay these bills.

Mortgage interest relief is about €1600 for a couple. Rent relief is about about €660. There is a significant difference there.

I'm sure if they wanted a second house there might be some rent involved there too.

Here are the figures for my brother, as far as i know - they are not exact.

Male 35k p.a ... monthly take-home pay ~ €2400
Female 30k p.a ... monthly take-home pay ~ €2150
Combined €4,550 (not including overtime)

House €350K
Deposit €30K
Morgage 320K = 1394 pm (1527 - 133 interest relief) over 30 years (a 5 year difference from your guess. Thats a whopper)

Money in pockets after mortgage is paid = €3156 Without overtime or annual bonus.

With their disposable income they could double those payments if they want and pay off the mortgage earlier (Pay it off in 11 Years if they kept it doubled for 11 years. Less again with raises and bonuses). In fact i know of noone bar my old man that went the full term of their mortgage.

I'm not even going to bother going into outgoings because i dont know what they are. And if i dont know what my brothers outgoings are you certainly dont. So dont even try.

There are so many options after you get your initial mortgage - to pay off earlier or trade up etc that its pointless trying to pick one.

Anyway, thats neither here nor there.

Back to my point though.
In my previous post, I have shown you how affordable the payments on an average mortgage are to the average couple. That is all i wanted to do. Not argue about what someone is Piss1ng up a wall or not.
And i think you'll have to agree. Even the payments on a €400k mortgage is extremly easily affordable to a couple.

Where is this house for 350k? It must be in the back of Balivor or somewhere at that price.

So your brother and his girlfriend are above average earners, yet they live in the cheapest house they can find - this is how skewed the market is.

Renting is the best thing any young person can do in today's market conditions - sit on the fence and evaluate the risk, only then should you enter the bull-ring. AFAIK, risk at the moment is massive and I would not be willing to lose when there's a 35 year mortgage for a crap house for the loser (likely) and a crap house and maybe a little bit of capital appreciation for the winner (unlikely). I think you're a loser either way when you consider what you get for your money elsewhere in Europe and the UK.

davidoco

JimmySmith wrote:

Can we just say that a couple on €65k between them would have about €3k a month left in their pockets after paying the payments on a €350K mortgage - to do with as they please?

€3,000 a month is easily spent by a couple on VHI, House Insurance, Life Insurance, doctors, two week holiday, savings, ESB, Phone, Mobile, car loan/insurance/tax/service/petrol and food.

And that's before child minding!

galah

getting OT now, but what about the time when problems arise in the house?

Like a broken heater/boiler/shower/fridge/roof, you name it - as a renter, I ring my landlord, and he'll have to fix it...

As a buyer on a tight budget, you have a problem...

JimmySmith

davidoco wrote:

€3,000 a month is easily spent by a couple on VHI, House Insurance, Life Insurance, doctors, two week holiday, savings, ESB, Phone, Mobile, car loan/insurance/tax/service/petrol and food.

And that's before child minding!

Yeah right !!! €36,000 a year in your pocket after tax and mortgage and you're going to be living in poverty

. ESB isnt going up by that much you know.
Most jobs pay for VHI. VHI pays for Doctors. Life insurance - Dont know - mine is €40 per month. Savings - As much as they feel like i guess. Car, You can spend as much or a little as you want on a car. Insurance and tax for the car - about €1000 a year for both. Petrol, who knows - I spent about €1500 last year on petrol. They would spend less. Holidays - as much or as little as you like too. Food - Whatever you want as long as you dont starve or turn into a cheese burger.
How much do you think all those things cost? How much would you say they will have left out of €36000 after these costs?

Children arent even in sight yet.
I'm sure if and when they do decide to have children they'll be glad they have a house that they own. Funny, people always seem to manage fine when they have children anyway.

House is in Phibsboro. Nice house too.
They bought it, not because it was cheap, but because they lived a few doors away for a few years and like the area. They like the house. They want their own house. They dont want to be renting anymore. They feel that they can easily sacrifice a few hundred euro a month for this. And both work in the city centre.

The other house they looked at was €455k. Which would have given them over €2500 a month (€30,000) left in their pockets after tax and mortgage payments (and it might not stretch for that ESB bill

) , but they prefered the location of the one in Phibsboro.

daveirl

This post has been deleted.

davidoco

JimmySmith wrote:

Yeah right !!! €36,000 a year in your pocket after tax and mortgage and you're going to be living in poverty .

All I'm saying is that anyone who thinks that a young couple on 60 or 70 thousand joint income are going to be paying off these 30 years mortgages early are wrong.

Here's 30 euro disposable income.

Outgoings - yearly
Food/Utilities/Entertainment (400 pw) 20800
Life Assurance Dual Life 395
VHI 1050
Car Insurance 675
Car Tax 600
Car Mainteance 500
Holiday 2000
Dental 200
Optician 200
Petrol (40 pw) 2080
Car rapayment 3600
Bank Charges duty etc 120
Savings (50 pw) 2600
TV Licence 150
Clothing 1000

Total 35970

chump

JimmySmith wrote:

Yeah right !!! €36,000 a year in your pocket after tax and mortgage and you're going to be living in poverty . ESB isnt going up by that much you know.
Most jobs pay for VHI. VHI pays for Doctors. Life insurance - Dont know - mine is €40 per month. Savings - As much as they feel like i guess. Car, You can spend as much or a little as you want on a car. Insurance and tax for the car - about €1000 a year for both. Petrol, who knows - I spent about €1500 last year on petrol. They would spend less. Holidays - as much or as little as you like too. Food - Whatever you want as long as you dont starve or turn into a cheese burger.
How much do you think all those things cost? How much would you say they will have left out of €36000 after these costs?

Children arent even in sight yet.
I'm sure if and when they do decide to have children they'll be glad they have a house that they own. Funny, people always seem to manage fine when they have children anyway.

House is in Phibsboro. Nice house too.
They bought it, not because it was cheap, but because they lived a few doors away for a few years and like the area. They like the house. They want their own house. They dont want to be renting anymore. They feel that they can easily sacrifice a few hundred euro a month for this. And both work in the city centre.

The other house they looked at was €455k. Which would have given them over €2500 a month (€30,000) left in their pockets after tax and mortgage payments (and it might not stretch for that ESB bill ) , but they prefered the location of the one in Phibsboro.

Jimmy you're grasping at straws. This 'excess' money is between 2 people for starters. It's not all that tbh.
They are in their 30's, if they're going to have children it'll be well within 10 years.
Most people in their 30's want to be able to drive their own car.

All that said, it sounds like they did well with their purchase, in terms of quality and price (from what you've said)... but what about the couple who pick up the €455k house?
Throw in the cars, and insurance, and taxes, and petrol, and ESB, and oil, and clothes, and weddings, and parties, and holidays, and nights out, and organic produce, and on contraception, and lubricant, and computer, and yearly house maintainence, and window-cleaning, and ... and child, and whatever else and money will become tight. Can you accept this?

JimmySmith

galah wrote:

getting OT now, but what about the time when problems arise in the house?

Like a broken heater/boiler/shower/fridge/roof, you name it - as a renter, I ring my landlord, and he'll have to fix it...

As a buyer on a tight budget, you have a problem...

The point i am making is its not as tight a budget as people here are making out. And dont try to make out that repairs for home owners break the bank either. How often does is new heater, shower, fridge needed. For structural problems, Insurance, Insurance, Insurance.

daveirl wrote:

This post has been deleted.

Try some different companies to work for

and if they dont pay medical insurance for you.
Try health steps with VHI.
http://www.vhi.ie/healthsteps/hs_benefits.jsp
Depending on the grade you get money towards every visit to the Doctor, Dentist , physio and all that stuff. It costs about €100 a year if you say you're in the credit union, €110 if you dont. You'll get tax relief too if you have to pay it yourself. How often do you go to the doctor? Is it worth it?
VHI are the most expensive insurer these days too. Try Bupa or VIVAS too.
Glad to be of service

JimmySmith

davidoco wrote:

All I'm saying is that anyone who thinks that a young couple on 60 or 70 thousand joint income are going to be paying off these 30 years mortgages early are wrong.

Here's 30 euro disposable income.

Outgoings - yearly
Food/Utilities/Entertainment (400 pw) 20800
Life Assurance Dual Life 395
VHI 1050
Car Insurance 675
Car Tax 600
Car Mainteance 500
Holiday 2000
Dental 200
Optician 200
Petrol (40 pw) 2080
Car rapayment 3600
Bank Charges duty etc 120
Savings (50 pw) 2600
TV Licence 150
Clothing 1000

Total 35970

I can just hear everyone here laughing at this

You need to get control of your finances more than any house buyer. In fact more than anyone else in the country.
Quick, call Eddie Hobbs.

D'Peoples Voice

Just a question on renting!
Students were to date one of the biggest groups in the renting category. Since McGreevy gave introduced grants for colleges to build on-campus accommodation to reduce the rental costs paid by students, there have been hundreds of these appartments completed in the last year or two.

Given there will therefore be a fall-off in demand from students for off-campus accommodation, in addition to the fact that students only rent for 8 months a year (and full year leases are not enforceable if they give you 30 days notice in writing), what do people think of the value for money aspect of buy-to-let property up near the new Grangegorman DIT?
I'm thinking if buy-to-let properties are giving low yields at present, then surely a buy-to-let property for students is loss making unless the landlord can somehow persuade a student to pay 12mths rent over a 8 month period!

JimmySmith

chump wrote:

Jimmy you're grasping at straws. This 'excess' money is between 2 people for starters. It's not all that tbh.
They are in their 30's, if they're going to have children it'll be well within 10 years.
Most people in their 30's want to be able to drive their own car.

All that said, it sounds like they did well with their purchase, in terms of quality and price (from what you've said)... but what about the couple who pick up the €455k house?
Throw in the cars, and insurance, and taxes, and petrol, and ESB, and oil, and clothes, and weddings, and parties, and holidays, and nights out, and organic produce, and on contraception, and lubricant, and computer, and yearly house maintainence, and window-cleaning, and ... and child, and whatever else and money will become tight. Can you accept this?

You are the one grasping here. You forgot to throw in the kitchen sink too.
So What about the ones with the €455k house. They have €30k to pay for the kitchen sink.
I most definitely dont accept that a couple with more than €30k in their pockets after tax and mortgage payments will have problems with money at all.

lomb

all housing wealth is going to be redistributed. people die, people inherit. when a parent dies and an average estate of 7-800 grand is redistributed between 2 or 3 kids, then come the time those people struggling wont be struggling at all.

davidoco

JimmySmith wrote:

I can just hear everyone here laughing at this

I pointing out to you that your talking sh** when you say that your brother is going to be paying off his loan any time soon. I'm showing that the disposable income of 36,000 your talking being used to make extra mortgage repayments is a fallacy.

Unfortunately for him I can see him getting squeezed a bit more when interest rates go up another 1% or 2%. Also he will be getting no more tax relief on interest as he is maxed out on that. When he does have kids he won’t be driving around in a car with an air bag, he won’t be going on anything but a package holiday and he won’t be going out to dinner too often. And coupled with that he has to live in a 2 bed terraced house Phibsboro.

CiaranC

Very good arguments Jimmy. I can never reconcile the fact that i will have 40k a year to live on (for two of us) after paying for my property with the notion that nobody in my situation can afford property.

Im constantly reading about how nobody can afford to own their own home, but that flies in the face of everyone I know buying over the last year or two.

It doesnt make sense.

galah

lomb wrote:

all housing wealth is going to be redistributed. people die, people inherit. when a parent dies and an average estate of 7-800 grand is redistributed between 2 or 3 kids, then come the time those people struggling wont be struggling at all.

provided that people have parents here, who actually own a house worth that much...

Just to throw another factor into the equation: It was said (some time ago, in the media) that all these foreigners coming in will have a big share in properties bought, and will keep the construction sector booming, along with the demand for housing. Now can anyone tell me how a foreigner on an average wage (say 30 k/year) with no SSIAs coming in, no parents to fall back on (even to move in with to save on rent) and for argument's sake no savings will EVER be able to buy a house anywhere near any of the bigger cities, where houses go for 10-15 times the yearly salary?

chump

CiaranC wrote:

Very good arguments Jimmy.

What is/are his argument(s)?

All he's sais is that it is affordable for a couple on a joint income of €65k a year to buy a house for €350k.
That's not an argument.

The latest BOI report says that average home prices in Dublin may be at €530k by year end. Can they afford that?

Can they afford the €350k if they have children?
Can they afford it if they have 2 cars?
Can they afford it if rates increase by 1 or 2 %?
Can they afford it if one of them loses a job?

Maybe the answer is 'yes' to all the above.
But what about a couple on €50k?
What about a couple who want to buy a larger house with space for children?

What of the fact that if the value in the house remains static, and they were to rent an equivalent house and save the difference, they'd be in a better position in a few years time?

All Jimmy has given is ONE example of ONE sceanario where a couple can 'comfortably' afford to buy a small house.

JimmySmith

davidoco wrote:

I pointing out to you that your talking sh** when you say that your brother is going to be paying off his loan any time soon. I'm showing that the disposable income of 36,000 your talking being used to make extra mortgage repayments is a fallacy.

Unfortunately for him I can see him getting squeezed a bit more when interest rates go up another 1% or 2%. Also he will be getting no more tax relief on interest as he is maxed out on that. When he does have kids he won’t be driving around in a car with an air bag, he won’t be going on anything but a package holiday and he won’t be going out to dinner too often. And coupled with that he has to live in a 2 bed terraced house Phibsboro.

I'm sorry but i'm still laughing at those figures you put up

I see that the only rational way that people are argueing that a couple with over €30k to spend after tax and mortgage is to bring the fact that they may have kids into it.
Hands up here who rents and wants to be still renting if they are married and have kids?

kluivert

So has the property market reached its peak then.

davidoco

CiaranC wrote:

Im constantly reading about how nobody can afford to own their own home, but that flies in the face of everyone I know buying over the last year or two.

It doesnt make sense.

People are of course buying houses but not in the area which they would like and I'm not talking about South County Dubiln. They are being forced into areas where they have no family and or no connections. I like you know of plenty of people buying houses but not one who bought a house (3 bed semi) within 30 miles of where they grew up (west Dublin 13).

CiaranC

All he's sais is that it is affordable for a couple on a joint income of €65k a year to buy a house for €350k.
That's not an argument.

Ok, the fact that people can buy homes is irrelevant to a discussion on property.

Heh.

chump

CiaranC wrote:

Ok, the fact that people can buy homes is irrelevant to a discussion on property.

Heh.

I'm pretty sure the discussion was on 'Housing bubble starting to pop'. Hehheh.

Of course by providing one example of how a relatively well-off couple can afford to buy a home at well below the average price for the region Jimmy has put forward irrefutable evidence to suggest that there is no 'bubble'.

Hoho