Housing bubble starting to pop?

Pa ElGrande · 06-08-2006 6:38pm

SimpleSam06 wrote:

Have you got any links to back that up for Ireland?

If you run a query on the CSO for "Office Machinery and computers" industry sector from 1999 to 2006 you will see wages decrease or remain static through the end of 2001 to 2003, its only it the last two years have they begun to pickup again.

http://www.cso.ie/px/pxeirestat/Dialog/varval.asp?ma=QIJQ1&ti=Tables%205%20and%206:%20Average%20Earnings%20and%20Hours%20Worked%20by%20Sex,%20Industry%20Sector%20and%20Quarter&path=../Database/EireStat/Earnings%20Employment%20and%20Productivity%20in%20Industry/&lang=1

Pa ElGrande · 06-08-2006 7:29pm

SimpleSam06 wrote:

I think you might be putting too much emphasis on the influence of oil on the property market. If and when peak oil occurs, there are already many viable alternatives in terms of fuel. One extant example is in Brazil, where a lot of cars were converted to pure ethanol, or with a flex fuel option where a car could run on both (94% of cars in Brazil at one stage, and its very easy to convert your car over). This ethanol was produced from sugar cane. In addition to this, we have extremely promising research happening in the area of BioDiesel, with elephant grass which can be grown in Europe leading the way. There is really no reason to be concerned about fuel shortages.

Genererally agree, but none of these technologies exist on the Irish market right now and we can't grow sugar cane, it will take at least a decade for any of them to become viable if ever. Right now Ireland is more dependant on oil and gas that the Americans, since we don't have our own supplies so we pay full market rates.

"If we in Ireland used 10% of our arable land we could generate 30% of our electricity requirement."

Elephant grass could meet 30% of electricity needs
http://www.ireland.com/newspaper/front/2005/0907/3875614416HM1BA.html

The Economic and Social Research Institute (ESRI) has found Ireland's economy to be overly dependent on oil and natural gas, making it a pressing matter that we find alternatives. The ESRI has stressed that having a guaranteed steady energy supply into the future is crucial to keeping foreign multinationals anchored here.

Could elephant grass really solve our oil crisis?
http://www.unison.ie/irish_independent/stories.php3?ca=45&si=1470718&issue_id=13012 [free registration required]

The plant is a perennial and, once established, shoots to 14 feet or more, with a feathery silver-coloured foliage. The version tested is a hybrid of two species, which means it is vigorous and sterile.

The crop should prove profitable for farmers, with a one hectare field able to produce enough energy to replace 36 barrels of oil.

Grass grows on scientists as source of electricity
http://www.sustainabledevelopments.ie/content/category/21/renewables?id_content=897&Grass+grows+on+scientists+as+source+of+electricity

Biomass Crops as a Source of Renewable Energy: European Experience with
Miscanthus and Projections for Illinois
http://www.ace.uiuc.edu/pERE/conference/papers/long.pdf

There are a number of hurdles such as finding a suitable variety for Irish conditions, harvesting, suitable land, drying and storage and energy market conditions that have to be overcome before it becomes viable, but this can be achieved in the long term

SimpleSam06 wrote:

The main influence from international areas on the Irish property market is in interest rates, which are controlled by the ECB. The number of factors that affect interest rates are many, and its mostly the americans who start panicking about oil, unreasonably so.

Anyone who has been to America will know how much you need a car to get around, they depend on cheap oil and through the dollar hegemony the rest of the world subsidises their standard of living. Except the West (Ireland icluded) have been used to this for so long that we have not yet got used to the idea that China and India's economies are growing fast (2 billion people) and looking forward to having the same lifestyle we have, this means they need oil. We have to compete with them for limited supplies of oil, which is why the Americans want to "secure" the middle east to guarantee a cheap source of oil. Until alternatives to oil or new supplies come onstream the oil and gas driven cost push inflation is not going away.

China: Growth May Bring Tighter Money
http://msnbc.msn.com/id/13918446/

Is the era of easy oil over?
http://fredericksburg.com/News/FLS/2006/082006/08062006/211843

Commentary: India stumbles in quest for oil
http://www.iht.com/articles/2006/07/18/bloomberg/sxmuk.php

Harvests of corn and other crops are likely to be drawn into a tug of war between people's need for food and their need for fuel, agricultural economists say.

Corn is the most cost-efficient and popular raw material used in the United States to make ethanol. That's important because the fuel has gotten increasingly competitive with gasoline as oil prices have risen.

Demand for Ethanol May Drive Up Food Prices
http://www.sciencenews.org/articles/20060722/food.asp

The combination of heatwaves in Europe and the US, low global grain stocks and an increase in production of biofuels has seen wheat prices rise to 10-year highs and may lead to big increases in the cost of bread and pasta.
Corn and barley prices are also likely to rise, which may push up the cost of beer and breakfast cereals.
The US has had the warmest year on record and Europe has experienced a heatwave that has damaged grain crops at a time when worldwide stocks are relatively low.

Heatwaves and biofuel demand in Europe and US to fuel bread, pasta and beer price rises
http://www.finfacts.com/irelandbusinessnews/publish/article_10006685.shtml

Forgot to add this earlier, low global grain stocks mean higher food prices says he looking at his Tesco shopping bill.

SimpleSam06 · 06-08-2006 9:37pm

Well this thread has veered wildly off topic, so the last thing I'll say on the oil issue is that there are many alternatives to oil, many of which are technologically viable right now. Yes it might take ten years to push them on the market (although the case of Brazil seems to argue otherwise) but the oil tap isn't going to dry up tomorrow.

Even the crops question is academic since biodiesel can be grown in algae farms, which in fact offer a better ROI than any crop. We need oil far less than the americans, since our country is a lot smaller than theirs, and has far less population.

Their dependance on oil and their insistence on oil being traded for in dollars is the only real reason that oil prices will affect inflation, and I maintain that there are many many other factors which can affect interest rates, including but not limited to trade deficits, employment levels, and technological change.

Pa ElGrande · 06-08-2006 10:29pm

Back on topic, for those interested this is the Bulls perspective.

House Price Inflation continuing to outpace earnings inflation

First Time Buyers struggling to get onto the first rung of the property ladder

System has already flexed to accommodate first timers
100% Mortgage

Interest only repayments

Terms extended to 40 years

Room rental recognised in affordability calculations

Will more radical solutions be required?
Inter generational mortgages

Shared ownership structures

Opportunities & Challenges in The Irish Mortgage Market
http://www.ibf.ie/pdfs/NMCDenisCasey.pdf

In fairness they do point out the problems with the market at this point in time, and they are prepared to exploit the situation with intergeneration mortgages if need be......

ronbyrne2005 · 07-08-2006 9:45am

Will more radical solutions be required?
Inter generational mortgages
Shared ownership structures

No intergenerational mortgages and shared ownership arent necessary, with the amount of housing being built every year here there will be no shortage of houses in years to come, we all know what happens when supply exceeds demand.

lomb · 07-08-2006 10:48am

as said economics can be summed up in 3 words supply and demand.
the thing is they aent buiilding any proper semis or detached houses any more, the only question is whether oversupply of high density stuff will knock prices on mature stuff. my guess is i dont know-possibly

shoegirl · 07-08-2006 11:55am

SimpleSam06 wrote:

30k is the MEDIAN wage, not the average, which means half of the working population is below that. And even at 30,000 per annum, most houses are prices at ten to fifteen times that. Whats wrong with this picture? Wages aren't going up that fast, 3% or so, barely keeping up with inflation, so further major house price rises are truly unsupportable.

Thats not true. The only statistic measured in Ireland I've been able to find is the so-called "average industrial wage" which is recorded by the CSO and around 30-31k.

Nobody in Ireland actually records the median wage (which you are correct in saying that is the 50% mark). In fact the real median wage in Ireland is probably a lot less than 30k and not influenced by wage rises in sectors like the runaway public sector. I would put it at around 26-28k in fact.

The thing is, I work in companies where a large proportion of the workforce earn around 19-24k and these people have bought and are buying houses. A lot of these people are under 30s with strong parental help (deposits and more handed to them on a plate) and significant savings because they never had to hand up to parents when they lived at home (and many who went to local 3rd level institutions could afford huge savings even on modest wages). Add into this SSIAs (and I know lone parents who have savings of as much as 7-8k and more) and it makes sense why somebody on 23k a year could buy a house worth 160k two or three years ago.

The problem is that there are also lots of people (myself included) earning 30k+, but with limited savings and no parental help (in fact doubly stamped by years of being unable to save since 20% of income was handed up at home to keep things going, while parents who are still relatively poor cannot afford to help out). We keep the rented market going for investors. Add to this group rent allowance tenants, migrant workers and younger people on low to average wages from non-wealthy backgrounds. A lot of these people will want to get on the ladder, but not yet. It might keep demand going in a few year time.

The thing is, a couple on a combined income of 60k a year with even 20k savings can still afford a house or apartment worth 340k or so and outside Dublin thats not unrealistic. The real problem is as the maximum figure is limited due to interest rises and the SSIA snowball wears out. Then we'll see whats really happening and how demand pans out.

I would guess that the market will splinter into areas of high demand and areas of collapsing demand as investors are forced to cash in gains due to low yields and stalling prices.

lomb · 07-08-2006 1:50pm

regardless of what the median wage is prices overall will settle at what they are worth. possibly 10-12 years of pretax earnings for the residents of that unit.
the thing is inflation will probably mean by the time 20 years has rolled around then people will be on probably 100% more but the price will be fixed as the day you signed contracts all those years ago as thats how property works.
i think we need another couple of years of supply to balance the market.

whizzbang · 07-08-2006 1:53pm

lomb wrote:

regardless of what the median wage is prices overall will settle at what they are worth. possibly 10-12 years of pretax earnings for the residents of that unit.

is that a sustainable amount? Previously I thought it was 3-4 times (single person working)? Which is 6 to 8 times given two people working.

10 to 12 still sounds a bit above what people can afford to me, especially with increasing interest rates.

SimpleSam06 · 07-08-2006 2:27pm

shoegirl wrote:

Thats not true. The only statistic measured in Ireland I've been able to find is the so-called "average industrial wage" which is recorded by the CSO and around 30-31k.

Yeah I'll look it up when I get a chance.

shoegirl wrote:

The thing is, I work in companies where a large proportion of the workforce earn around 19-24k and these people have bought and are buying houses. A lot of these people are under 30s with strong parental help (deposits and more handed to them on a plate) and significant savings because they never had to hand up to parents when they lived at home (and many who went to local 3rd level institutions could afford huge savings even on modest wages). Add into this SSIAs (and I know lone parents who have savings of as much as 7-8k and more) and it makes sense why somebody on 23k a year could buy a house worth 160k two or three years ago.

So let me see if I get this straight... you are saying that low earners with lower standard degrees are all getting parental help in the form of free money, and lots of it, as well as land and who knows what else, while the higher earners with good degrees are having to struggle by on their own? I think you have your parties muddled up there... Mind you in your next paragraph you say the opposite...

shoegirl wrote:

We keep the rented market going for investors. Add to this group rent allowance tenants, migrant workers and younger people on low to average wages from non-wealthy backgrounds. A lot of these people will want to get on the ladder, but not yet. It might keep demand going in a few year time.

The rental market is not as hot as you think it is. Mostly rent won't even cover the interest payments on a mortgage these days. And as for migrants wanting to get on the property ladder, they really don't care about property in ireland, hard as it is to believe. They are accumulating money and sending it home, living as cheaply as they can in the meantime. When the party is over for our economy, they will move on to the next economy, probably Germany.

shoegirl wrote:

The thing is, a couple on a combined income of 60k a year with even 20k savings can still afford a house or apartment worth 340k or so and outside Dublin thats not unrealistic.

Oh yes indeed it is unrealistic. There are 275,000 reasons why thats unrealistic.

shoegirl wrote:

The real problem is as the maximum figure is limited due to interest rises and the SSIA snowball wears out. Then we'll see whats really happening and how demand pans out.

You seem to think that limiting the maximum figure is a problem? The problem is the maximum figure has gone far too high.

shoegirl wrote:

I would guess that the market will splinter into areas of high demand and areas of collapsing demand as investors are forced to cash in gains due to low yields and stalling prices.

Investors won't have any gains, most of them will be making a loss and a lot of them will not be able to maintain solvency. I say good riddance to them, residential property investment and speculation should be strongly discouraged.

SimpleSam06 · 07-08-2006 2:33pm

lomb wrote:

regardless of what the median wage is prices overall will settle at what they are worth. possibly 10-12 years of pretax earnings for the residents of that unit.

You seem to be confusing "what it is worth" with "what the banks will lend out in order to increase their profits". What most places are worth, if you take into account cost of land, labour and materials, is maybe 3 to 4 times average wage, and thats factoring in a profit margin for developers. Market sentiment and easy credit (more one than the other) have pushed prices to an insane high. The market will balance when residential housing drops to about half what it is today.

Maybe then Irish investors will learn that there are other ways to make money than buying land. Talk about a one-string fiddle.

lomb · 07-08-2006 5:28pm

whizzbang wrote:

is that a sustainable amount? Previously I thought it was 3-4 times (single person working)? Which is 6 to 8 times given two people working.

10 to 12 still sounds a bit above what people can afford to me, especially with increasing interest rates.

i cant see a house going for 4 times average industrial ever again regardless of supply/demand. to build a apartment or house of 1000 sq foot(even apartments that arent 1000 have common areas that need to be built) costs 150000. add to that land costs curently running at 200000-300000 grand a unit and you can see why things cost what they cost. add to that planning laws that are tightening and you have to place values on permissions and the councils cut on affordable housing / contributions to infrastructure of perhaps 40 grand a unit total. yes 40 grand!!!

i think if supply overwhelmes demand and prices fall then people will just stop building and start land banking like they did before. after all isnt that how developers got rich, they bought aload of land that was 'worthless' at the time.

i think 10-12 times average industrial is the lowest you will ever get a starter home at.however saying all this
i suppose in the usa u can get houses for 70-100 grand, but they are made of paper and that quality of building will never be accepted here. that helps to cut costs to 40-50 grand a unit.

SimpleSam06 · 07-08-2006 5:58pm

lomb wrote:

i cant see a house going for 4 times average industrial ever again regardless of supply/demand. to build a apartment or house of 1000 sq foot(even apartments that arent 1000 have common areas that need to be built) costs 150000.

What are you building them out of, bricks of gold? Using nubile geishas? Where do you think all those low cost immigrant workers are working?

lomb wrote:

add to that land costs curently running at 200000-300000 grand a unit and you can see why things cost what they cost. add to that planning laws that are tightening and you have to place values on permissions and the councils cut on affordable housing / contributions to infrastructure of perhaps 40 grand a unit total. yes 40 grand!!!

And where are you building, the middle of phoenix park?

lomb wrote:

i think if supply overwhelmes demand and prices fall then people will just stop building and start land banking like they did before. after all isnt that how developers got rich, they bought aload of land that was 'worthless' at the time.

There are 275,000 homes sitting empty. Its far too late to stop building.

lomb wrote:

i think 10-12 times average industrial is the lowest you will ever get a starter home at.

Yes, that would make for a nice soft landing scenario, wouldn't it. Unfortunately its not supported by any actual facts.

lomb · 07-08-2006 6:17pm

SimpleSam06 wrote:

What are you building them out of, bricks of gold? Using nubile geishas? Where do you think all those low cost immigrant workers are working?

And where are you building, the middle of phoenix park?

There are 275,000 homes sitting empty. Its far too late to stop building.

Yes, that would make for a nice soft landing scenario, wouldn't it. Unfortunately its not supported by any actual facts.

150 euro a sq foot is the standard build cost in greater dublin area. thats what it costs hence the 150000 per 1000 sq foot of livable/common area.
the site costs of 200000+ per unit even per high density unit are very accurate costs even in low end suburban areas. near where the family is in dublin 22 the former sds depot on the naas road at 14 acres went for 120 million euro+9% stamp duty. thats about 10 mill an acre. factoring a density of 50 an acre thats about 200 grand a unit. the council will want about 7-10 grand a unit in infrastructure developement and i think its 20% set aside for affordable housing. this means the per unit cost including all this is pushing 300 grand and thats before the 150 grand build cost per unit. factor in the premium for risk(no planning yet!!!), profit and interest and u can figure out how far developers are paying per unit!!!

the above are facts take them as you wish. i cant believe how far property has gone personally. i went to a house viewing in d6 some months ago, and 2 crappy terraced houses with no gardens went for 2.25 mill each. thats life i suppose. u have to pay the piper if u want a property these days.

Afuera · 07-08-2006 6:33pm

lomb wrote:

i cant see a house going for 4 times average industrial ever again regardless of supply/demand.

The price of housing, like other goods and services, is determined by supply and demand.

The average industrial wage only puts an upper limit to what can reasonably afforded by the average person. The lower limit of the price of a house, is hard to define. It could actually be less than the cost of building a replacement unit since second-hand homes built at a cheaper cost in the past are perfect subsitutes for newly built homes.

lomb wrote:

to build a apartment or house of 1000 sq foot(even apartments that arent 1000 have common areas that need to be built) costs 150000. add to that land costs curently running at 200000-300000 grand a unit and you can see why things cost what they cost. add to that planning laws that are tightening and you have to place values on permissions and the councils cut on affordable housing / contributions to infrastructure of perhaps 40 grand a unit total. yes 40 grand!!!

Where are you getting these figures from? The UK government has developed a competition for affordable housing where 2 bedroom houses are being constructed for less than 60k (Sterling) a unit. I'd say there's more of a variation in the cost of land than you suggest also.

lomb wrote:

i think if supply overwhelmes demand and prices fall then people will just stop building and start land banking like they did before. after all isnt that how developers got rich, they bought aload of land that was 'worthless' at the time.

If people just stop building then that would spell disaster for the country. What would happen to the huge percentage of people employed in construction? what would happen to the governments tax receipts? Who is going to live in all the houses we've built if there is no immigration (or worse still, emigration), due to high unemployment?

lomb · 07-08-2006 6:41pm

Afuera wrote:

If people just stop building then that would spell disaster for the country. What would happen to the huge percentage of people employed in construction? what would happen to the governments tax receipts? Who is going to live in all the houses we've built if there is no immigration (or worse still, emigration), due to high unemployment?

no one owes anyone a living. all money made today is what i call 'money NOW' a very different animal to some promise of something in the future that may or may not pay out. i suggest people employed in construction save and invest their money wisely for rainier days. the boom will cease, even a semi property bull like me knows that. all new construction will cease in high density tat when theres no demand after oversupply and they will build what people want even at a loss in some cases. whether this happens in 2, 5 or 10 years it will happen.

the 150 a sq foot is what a profession chartered surveyor will tell u it costs. in the uk its running at 65-£70 sterling+ vat per square foot thats about 82£ or 120 euro a sq foot, dublin at 150 is due to a 15-20% price gouge or 'rip off' if u want to call it that ( i wouldnt personally, everyone wants their cut of the tiger while they can get it). it is infact at around 120 in places like galway, and north in places like donegal where they cannot gouge. places like meath have the same dublin builders billing the same 150 a sq foot.

the affordable house was very small i think and was prefabricted and mass produced to cut costs. i cant see them taking off , the government has little to do with housing compared to healthcare , schools or providing education.

Afuera · 07-08-2006 6:47pm

lomb wrote:

the site costs of 200000+ per unit even per high density unit are very accurate costs even in low end suburban areas. near where the family is in dublin 22 the former sds depot on the naas road at 14 acres went for 120 million euro+9% stamp duty. thats about 10 mill an acre. factoring a density of 50 an acre thats about 200 grand a unit. the council will want about 7-10 grand a unit in infrastructure developement and i think its 20% set aside for affordable housing. this means the per unit cost including all this is pushing 300 grand and thats before the 150 grand build cost per unit. factor in the premium for risk(no planning yet!!!), profit and interest and u can figure out how far developers are paying per unit!!!

The SDS site (which incidentaly only sold for 107 million) is certainly not all going to be used for residential housing. There is a big possiblity of retail and business usage here which would appear to be a major factor in the price.

lomb · 07-08-2006 6:57pm

Afuera wrote:

The SDS site (which incidentaly only sold for 107 million) is certainly not all going to be used for residential housing. There is a big possiblity of retail and business usage here which would appear to be a major factor in the price.

fair enough i was advised it sold at the upper end of the spectrum , they were seeking offers above 80 million and were looking up to 120 million so i assumed it was 120. 107 million is not too far from 120 so my figures can be marked down about 12%, still leaves unit site costs above 250 per unit.

the site is marked in the development plan as suitable for development due to proximity to luas hub. the business usage is somewhat unlikely imho, the existing town centers at clondalkin and tallaght the planners wont want to destroy the viability, and the proximity to luas means the planners will favour high density residential, i believe in any case its zoned to protect provide and improve residential ammenity although im open to correction, i seriously doubt a local center or the impossible town center zoning.
tbh residential usage is probably worth slightly more than business usage per square foot, weve bought a 1400 square foot retail business unit in a prime spot near newlands cross for 700 albeit it needs fitting. weve reached a point that a 700 square foot apartment in clondalkin is selling at 400, so theres not alot in it. bear in mind you can pack alot more residential in than business as business relies to some extent on location.
the 107 million you quote really is a fantastic amount of money for 14 acres considering interest, risk and hassle to make a profit. the developer will get that money back out of people scalps if he has to and the design and price both will be such as to do that.

Afuera · 07-08-2006 6:59pm

lomb wrote:

no one owes anyone a living. all money made today is what i call 'money NOW' a very different animal to some promise of something in the future that may or may not pay out. i suggest people employed in construction save and invest their money wisely for rainier days. the boom will cease, even a semi property bull like me knows that.

I agree. And I genuinely hope people are preparing for the inevitable slowdown.

lomb wrote:

the 150 a sq foot is what a profession chartered surveyor will tell u it costs. in the uk its running at 65-£70 sterling+ vat per square foot thats about 82£ or 120 euro a sq foot, dublin at 150 is due to a 15-20% price gouge or 'rip off' if u want to call it that ( i wouldnt personally, everyone wants their cut of the tiger while they can get it). it is infact at around 120 in places like galway, and north in places like donegal where they cannot gouge. places like meath have the same dublin builders billing the same 150 a sq foot.

the affordable house was very small i think and was prefabricted and mass produced to cut costs. i cant see them taking off , the government has little to do with housing compared to healthcare , schools or providing education.

You're right it was smallish and used mass production techniques. Some features of these could be used by construction companies to keep costs down, even if there was not a great take up of them in general.

ronbyrne2005 · 07-08-2006 7:22pm

Lomb i think you'll see building costs and land costs coming down in the event of a correction. Developers are prepared to pay todays high building costs as the profits even after paying them are huge. Devlopers are building for a lot less in leitrim cavan etc as demonstrated by prices for houses there ,after taking land out of the equation the cost of building seems much lower down there.

Also in places in europe like france building costs seem much lower,i can see scope for such buildin rates here.
As for prices not going below 10-12times average wages i think your in fantasy land. If there for instance was an external shock (quite likely in todays globalised economy) and unemployment shot up the price of houses in ireland would fall substantially,prices in ireland should reflect this throgh a risk premium.

Properties in Dublin are currently trading at these levels 10-12 times average earnings if you assume averge earnings in dublin is approx 35k. Interest rates are more of a factor in determining the prices as high rates reduce the amount that can be borrowed and this sets a ceiling, i have no doubt that irish people would borrow twice as much regardless of income if the banks gave it to them.

Historically 3 or 4 times average salary was norm in ireland/uk , we'll never be that low again(baring an asteroid hit or epidemic killing half the population) because of the permanently increased number of dual income households ,long term low interest rates, higher disposable incomes but 10-12 times a single average salary is ridiculous,i'd say 8 times avaerage earnings in long term is about right given 5% mortgage rates. Look at the yield on properties in dublin and ask your self the real value.

So average prices in Dublin should come back to around 280k average mark rather than the current 420k(?) so 30-40% reduction maybe spread over 5-10 years,might not be too painfull. The price of land will have to come down to reflect this.
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.

lomb · 07-08-2006 9:09pm

ronbyrne2005 wrote:

Lomb i think you'll see building costs and land costs coming down in the event of a correction.

of course you are correct. personally i hope they do, all prices for good town development land are huge simply because they are based on putting up high density tat, and selling it as a lifestyle choice.

build costs also will correct if a slowdown happens, although i think theres a monopoly in build projects with no one particularly undercutting others in large developments. im not sure on that one though.

in response to a previous post re business use at sds, i think they will be standard retail below, and high density residential above at the very most. will be interesting to see what happens to all the land around sds. i used to fly a model plane on the farm beside it when i was a kid. those were the days:D

lomb · 07-08-2006 9:11pm

ronbyrne2005 wrote:

=
As for prices not going below 10-12times average wages i think your in fantasy land. I=

i meant household income averageing at 10-12 times average pretax. that means 2 people working per house if needs be so 2 people making 5-6 times average pretax. it also includes the income of someone if a room is rented out pro rata if u know what i mean.
i think we are at that point now and they are still going up, who knows where it will go?

Pa ElGrande · 07-08-2006 9:47pm

Ireland's economic performance remains strong. In recent years, real GNP growth was one of the highest among industrial countries; the unemployment rate was among the lowest; and HICP inflation declined to close to the euro area average. Employment growth was rapid, reflecting strong immigration and rising labor force participation. This remarkable performance reflected both good policies and fortunate circumstances. Prudent government spending led to declining government debt; low taxes on labor and business income encouraged labor supply and investment; and flexible labor and product markets helped growth. At the same time, favorable demographics boosted the working-age population, and participation in EMU lowered interest rates.

However, economic activity has become reliant on building investment and competitiveness has eroded. The share of the construction sector in economic activity has increased and is now one of the highest in Europe. Bank credit to property-related sectors has grown rapidly and now accounts for more than half of total bank lending. Household debt as a share of household disposable income rose to about 130 percent in 2005, among the highest in Europe. Reflecting the expansion of the labor-intensive construction and services sectors, labor productivity growth has declined. The combination of the slowdown in productivity growth, faster wage growth in Ireland compared to its trading partners, and the appreciation of the euro, has led to an appreciation of the ULC-based real effective exchange rate. Partly as a result, the contribution of net exports to growth has fallen steadily since 2001. After being in balance for several years, the external current account registered a deficit of about 2½ percent of GDP in 2005.

IMF Executive Board Concludes 2006 Article IV Consultation with Ireland
http://www.imf.org/external/np/sec/pn/2006/pn0688.htm

Report
http://www.imf.org/external/pubs/ft/scr/2006/cr06293.pdf

Growth strong but unbalanced - IMF
http://www.rte.ie/business/2006/0807/economy.html

JimmySmith · 07-08-2006 10:22pm

Heres an interesting little tidbit.

My little bro and his girlfriend were shareing a house with another person for the last 2 years.
€450 pm each in rent.

They just got a bid of €350k accepted on a 2 bed house a few doors away from the one they are renting now. Mortgage will cost them €1500 pm including the latest interest rate increase.

I asked them are they not worried about the amount they are paying out.
'Not in the least' they say.

Heres how they broke it down to me.

Their take home between them is €4500 PM between.
They would be paying €900 pm renting. 1500 - 900 = 600 pm extra to be paid.

2 SSIAs still to mature so a few bob in the bank, but by paying into SSIAs they are used to not having the €500 PM in their pockets from the SSIAs.

In 3 months they are not paying into SSIAs anymore. So they will only notice a difference of €100 per month in what they have now.

Even so - 4500 a month minus 1500 leaves them €3000 pm to spend on whatever they want after mortgage is paid.

A few % rise in Interest rates, an extra €30 a month on the heating bill. None of these things will really effect them at all. They have no intention of ever renting the spare room.

I asked if they thought they could invest the excess and make money with it instead of buying.
'Not at all. We are sick of shareing and want our own house to do with as we please. But we might get salary protection insurance -just in case.' - fair enough

As my bro says, he was living on €500 pm only a few years ago after rent was paid. He earns more money now than then.

This is a fairly typical scenario nowadays.

coolhandluke · 08-08-2006 2:58am

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 ?

hmmm · 08-08-2006 8:15am

coolhandluke wrote:

so why didn't he just move to a location where they would be on their own ?

That sounds eminently sensible. The example quoted would see them spend over 600 euro a month extra for a mortgage, nearly 8 grand a year (14k before tax). Every 1% rise in interest rates would probably cost them over 200 euro a month. Some people are just pissing money away.

CiaranC · 08-08-2006 8:39am

Maybe they dont want to live anywhere else?

lomb · 08-08-2006 9:08am

hmmm wrote:

Some people are just pissing money away.

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.

seamus · 08-08-2006 9:51am

hmmm wrote:

That sounds eminently sensible. The example quoted would see them spend over 600 euro a month extra for a mortgage, nearly 8 grand a year (14k before tax). Every 1% rise in interest rates would probably cost them over 200 euro a month. Some people are just pissing money away.

While it does sound like they're pissing €600/month away for the sake of owning their own property, the big difference is that paying a mortgage has more in common with adding to a savings account than renting a property.

Say for example, they're paying €1500/month over ten years - they'll pay out €180,000 in the course of that time (let's keep it simple). If they sell up, they may get €120,000 or maybe €100,000 towards their next property. And that doesn't include any inflation in the price of the house. So their net "loss" is €80,000. Now compare that to someone paying €900/month rent over ten years. They'll pay €108,000 and come out with nothing. 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.

lomb · 08-08-2006 9:57am

seamus wrote:

While it does sound like they're pissing €600/month away for the sake of owning their own property, the big difference is that paying a mortgage has more in common with adding to a savings account than renting a property.

Say for example, they're paying €1500/month over ten years - they'll pay out €180,000 in the course of that time (let's keep it simple). If they sell up, they may get €120,000 or maybe €100,000 towards their next property. And that doesn't include any inflation in the price of the house. So their net "loss" is €80,000. Now compare that to someone paying €900/month rent over ten years. They'll pay €108,000 and come out with nothing. 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.

exactly, yields on stock markets are poor overall, deposit acounts lose money net to inflation, and considering everything including gearing buying property is the best investment overall. we are still a coule of years away from a downturn in it so buy buy buy!

Raskolnikov · 08-08-2006 10:55am

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 · 08-08-2006 10:56am

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 · 08-08-2006 11:02am

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 · 08-08-2006 11:19am

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 · 08-08-2006 11:19am

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 · 08-08-2006 11:25am

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 · 08-08-2006 11:48am

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 · 08-08-2006 11:55am

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 · 08-08-2006 12:10pm

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. · 08-08-2006 12:17pm

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 · 08-08-2006 12:35pm

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 · 08-08-2006 1:14pm

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 · 08-08-2006 1:15pm

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 · 08-08-2006 1:22pm

This post has been deleted.

davidoco · 08-08-2006 1:30pm

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 · 08-08-2006 1:31pm

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 · 08-08-2006 1:39pm

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 · 08-08-2006 1:41pm

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 · 08-08-2006 1:44pm

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 · 08-08-2006 1:46pm

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.

Housing bubble starting to pop?

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