Property Market 2020

awec · 28-01-2020 9:36pm

Sheeps wrote: »

I think it's widely acknowledged that it has pushed up the price of homes.

It is impossible to know for sure. HTB was always intended to increase the number of buyers on the market, to incentivize developers to build. It was essentially a politically-friendly way of giving money to property developers.

Whether or not prices would have risen regardless nobody knows.

But the idea that if it were gone prices would magically come down is just wishful thinking.

The Shinners have moaned about HTB for years. They moaned that you could buy houses of a certain price. They do not like the fact that only people who pay tax get to benefit, this doesn't help them with their voters.

JohnnyChimpo · 28-01-2020 9:57pm

awec wrote: »

It is impossible to know for sure. HTB was always intended to increase the number of buyers on the market, to incentivize developers to build. It was essentially a politically-friendly way of giving money to property developers.

Whether or not prices would have risen regardless nobody knows.

But the idea that if it were gone prices would magically come down is just wishful thinking.

The Shinners have moaned about HTB for years. They moaned that you could buy houses of a certain price. They do not like the fact that only people who pay tax get to benefit, this doesn't help them with their voters.

I don't think anyone has ever suggested prices would come down "magically" - but the money wasted (some would say) on HTB could have gone towards building social housing which would unequivocally take some pressure off the market

awec · 28-01-2020 10:02pm

JohnnyChimpo wrote: »

I don't think anyone has ever suggested prices would come down "magically" - but the money wasted (some would say) on HTB could have gone towards building social housing which would unequivocally take some pressure off the market

Would it? The money spent on HTB might get you like 500 houses built if you're really lucky, in the grand scheme of things that's going to have next to no impact on the pressure on the market.

Conversely you could point at HTB and ask how many people have bought homes that otherwise wouldn't have been able to if the scheme didn't exist? Probably a lot more than 500.

JamesMason · 28-01-2020 11:02pm

awec wrote: »

It is impossible to know for sure. HTB was always intended to increase the number of buyers on the market, to incentivize developers to build. It was essentially a politically-friendly way of giving money to property developers.

Whether or not prices would have risen regardless nobody knows.

But the idea that if it were gone prices would magically come down is just wishful thinking.

The Shinners have moaned about HTB for years. They moaned that you could buy houses of a certain price. They do not like the fact that only people who pay tax get to benefit, this doesn't help them with their voters.

It's common knowledge that HTB caused a spike in asking prices, which let's face it, was for the benefit of the construction/development sector. Many of the electorate are keenly aware of this.

Marius34 · 29-01-2020 12:21am

I would not think, that HTB cause any significant impact on property price. It's only around 6000-7000 HTB claims (out of ~58K property sales), with over 1000 out of this number is HTB for self build. Realistically big portion of those anyway would compete in the same market. I'm quite confident, council housing or Buy/Build2Let has much bigger impact nowadays on Property price, since the number of properties taken out of the market is higher.
In the end where ever property ends, today's main issue is the lack of Supply.

Sheeps · 29-01-2020 12:55am

Marius34 wrote: »

I would not think, that HTB cause any significant impact on property price. It's only around 6000-7000 HTB claims (out of ~58K property sales), with over 1000 out of this number is HTB for self build. Realistically big portion of those anyway would compete in the same market. I'm quite confident, council housing or Buy/Build2Let has much bigger impact nowadays on Property price, since the number of properties taken out of the market is higher.
In the end where ever property ends, today's main issue is the lack of Supply.

It was 15k, and the developers cant have dual pricing for their homes so they would increase the price to account for HTB buyers and all future buyers coming through the HTB scheme.

Marius34 · 29-01-2020 7:48am

Sheeps wrote: »

It was 15k, and the developers cant have dual pricing for their homes so they would increase the price to account for HTB buyers and all future buyers coming through the HTB scheme.

15K? You probably talking about total over 3 years. What I wrote it's an annual estimate for 2019.

awec · 29-01-2020 11:54am

JamesMason wrote: »

It's common knowledge that HTB caused a spike in asking prices, which let's face it, was for the benefit of the construction/development sector. Many of the electorate are keenly aware of this.

Maybe, but the reality is obviously not that simple. There is nothing to suggest that without HTB prices would be any lower. There is nothing to suggest that prices would not have gone up regardless.

Also, it is widely regarded that HTB has had a negative effect on the pricing and sales of second hand homes.

To suggest that HTB is to blame for property prices is to suggest that scrapping it will lead to price drops. Highly unlikely, and as I said, just over-simplification of reality. The issue is, same as it always has been, a lack of supply.

Bargain_Hound · 29-01-2020 12:01pm

I think it is obvious the HTB inflated house prices thus lining the pockets of developers. I don't think it should be forgotten though that it helped first time buyers through the home owner barrier of saving the full deposit required to purchase. I'd imagine those who did buy using the HTB happily paid the increase in house prices as they were given an actual opportunity to purchase far sooner than they may have anticipated without HTB assistance.

IMO, the removal of the HTB scheme could negatively affect developers future plans to build more houses. How many new builds are sold to first time buyers availing of this scheme versus second time buyers? I bet it is hugely swaying towards towards the former.

Marius34 · 29-01-2020 12:49pm

Bargain_Hound wrote: »

How many new builds are sold to first time buyers availing of this scheme versus second time buyers? I bet it is hugely swaying towards towards the former.

50/50 for 2019. Around 5K (excluding self build) for HTB. And around same for STB. Although it's a different market atleast in Dublin Co. HTB is mainly < 400K, whereas STB > 400K. Many builders moving towards Build/Buy2Rent. For example read about Clongriffin, Gannon recently moved to build whole Clongriffin almost entirely for Build2Rent, probably it's more profitable than HTB...

JohnnyChimpo · 29-01-2020 1:05pm

awec wrote: »

Would it? The money spent on HTB might get you like 500 houses built if you're really lucky, in the grand scheme of things that's going to have next to no impact on the pressure on the market.

Conversely you could point at HTB and ask how many people have bought homes that otherwise wouldn't have been able to if the scheme didn't exist? Probably a lot more than 500.

Hmm, well thanks for encouraging me to actually google the numbers we're talking about here.

The Irish Times says:

Latest figures from Revenue show that Government had spent about €215 million incentivising first-time buyers through the scheme as of September of this year.

.

Now that's probably a 1,000 houses by a rough estimate of current costs. Economy of scale might get you a few more but it's a reasonable rough figure. I grant you that's a drop in the ocean in terms of market pressure, taken in isolation

Same IT article also says

Since its launch in April 2014, more than 32,000 people have applied for Help to Buy, although less than 15,000 of these claims have actually progressed to draw-down.

So that's a potential 15,000 people helped via this scheme. So it's a slam-dunk, right? I don't know... how do we quantify what percentage of these applicants would have been able to purchase somewhere else, but were diverted towards new builds by the HTB scheme? In what sense then do we say they were "helped to buy"? And then how do you quantify how many non-applicants were squeezed out of the purchase market by the concomitant rise in the overall market? I haven't heard any analysis about this other than anecdote, I think you can make the argument either way. Overall though, I would rather this money go to social building rather than indirect exchequer transfer to developers. But that's partly a moral and ideological argument

The_Conductor · 29-01-2020 1:21pm

Keep in mind RTE did an investigation on the implementation of the HTB scheme- which determined conclusively that the whole of the HTB 'grant' was incremented onto the price of new properties within 6 weeks of the launch of the scheme. Its probable that prices would have risen anyway (given the ongoing disparity between supply and demand)- however, it is almost definite that a 20k overnight increase in prices would never have occurred.

Yes- it was a sop to developers framed in such a manner that it sold a different story to prospective first time buyers- but the beneficiaries of the scheme were most certainly the developers, rather than the FTBs.

Of more arguable statistics is whether the HTB scheme was a principle driver of the divergence between the prices of new and secondhand properties. However, if you look at supplyside equations- only just over 10k new units were available on the open market last year- whereas over 55k secondhand units were. When the first time buyers are being corralled into the segment of the market with the smallest volume in supply- and abandoning the secondhand market- which has expanded exponentially- the excess supply (of admittedly poor quality units) in the second hand market only had one direction to go.

Of interest- would be whether an incoming government would expand the HTB scheme to include secondhand units- and would FTBs be willing to chase poorer quality stock (albeit at better prices)?

Personally, in an era of full employment- and CSO audited wage increases of 4.1% on average in 2019, I believe moving away from the HTB scheme altogether and towards an SSIA scheme structured in such a manner that it didn't have a defined end date- would be a more profitable manner of assisting first time buyers (and indeed subsequent purchasers) towards saving up the magical deposit requirements.

The fact that the HTB scheme is just for FTB and that its only for new properties- are two factors that critically need to be addressed.

SozBbz · 29-01-2020 1:22pm

IMO Help to buy has probably increased prices for qualifying new builds and then conversly negativly impacted the prices for 2nd hand homes in the same price bracket.

I don't think what really attracts people to the HTB scheme is the ability to use some of the "Help" to alleviate the deposit requirement. In that circumstance, where saving the full deposit the old fashioned way might take another 12-24 months depending on circumstance, I can see how this would be attractive, especially if you can get get the loan based on 3.5x on your existing salary.

By being able to buy straight away, a person could be saving themselves 12-24 months rent and starting their mortgage sooner. I can see in those circumstances how people become less price sensitive when it comes to looking at the overall package of a new build with Help to Buy.

awec · 29-01-2020 1:43pm

The_Conductor wrote: »

Keep in mind RTE did an investigation on the implementation of the HTB scheme- which determined conclusively that the whole of the HTB 'grant' was incremented onto the price of new properties within 6 weeks of the launch of the scheme. Its probable that prices would have risen anyway (given the ongoing disparity between supply and demand)- however, it is almost definite that a 20k overnight increase in prices would never have occurred.

Yes- it was a sop to developers framed in such a manner that it sold a different story to prospective first time buyers- but the beneficiaries of the scheme were most certainly the developers, rather than the FTBs.

Of more arguable statistics is whether the HTB scheme was a principle driver of the divergence between the prices of new and secondhand properties. However, if you look at supplyside equations- only just over 10k new units were available on the open market last year- whereas over 55k secondhand units were. When the first time buyers are being corralled into the segment of the market with the smallest volume in supply- and abandoning the secondhand market- which has expanded exponentially- the excess supply (of admittedly poor quality units) in the second hand market only had one direction to go.

Of interest- would be whether an incoming government would expand the HTB scheme to include secondhand units- and would FTBs be willing to chase poorer quality stock (albeit at better prices)?

Personally, in an era of full employment- and CSO audited wage increases of 4.1% on average in 2019, I believe moving away from the HTB scheme altogether and towards an SSIA scheme structured in such a manner that it didn't have a defined end date- would be a more profitable manner of assisting first time buyers (and indeed subsequent purchasers) towards saving up the magical deposit requirements.

The fact that the HTB scheme is just for FTB and that its only for new properties- are two factors that critically need to be addressed.

Disagree. Surely everyone who bought a house, who wouldn't have otherwise been able to buy a house, is a beneficiary?

Even if the grant did push up prices, it also simultaneously reduced deposit requirements drastically for FTBs, by up to 50%. It is hard to argue that this was not beneficial.

Take an example of a house costing 450k. FTBs need to save 45k if HTB doesn't exist. Lets say absolute worst case, the price goes to 470K instantly. The HTB reduces the deposit to 27k. This is a huge drop, and massively benefits people buying houses, because for many people gathering the deposit is the hard bit, especially if stuck renting in high rent zones.

DelBoy Trotter · 29-01-2020 1:46pm

awec wrote: »

Disagree. Surely everyone who bought a house, who wouldn't have otherwise been able to buy a house, is a beneficiary?

Even if the grant did push up prices, it also simultaneously reduced deposit requirements drastically for FTBs, by up to 50%. It is hard to argue that this was not beneficial.

Take an example of a house costing 450k. FTBs need to save 45k if HTB doesn't exist. Lets say absolute worst case, the price goes to 470K. The HTB reduces the deposit to 23.5k. This is huge.

I'd agree with the The_Conductor on this. The buyer is still paying the exact same for the house, they aren't saving anything. The developer is getting an extra 20k, and if the person buying the house isn't a first time buyer, they are actually paying an extra 20k than before the help to buy scheme came in

awec · 29-01-2020 1:51pm

DelBoy Trotter wrote: »

I'd agree with the The_Conductor on this. The buyer is still paying the exact same for the house, they aren't saving anything. The developer is getting an extra 20k, and if the person buying the house isn't a first time buyer, they are actually paying an extra 20k than before the help to buy scheme came in

20k over the lifetime of a mortgage, in exchange for bringing forward their purchase of a house a year or two. That's a year or two of less rent.

There is no way this can be argued as not being beneficial to buyers. It's not about whether or not they're ultimately paying less for a house, obviously they're not. 20k onto the mortgage in exchange for 20k in their hand right now? That’s a good deal.

JohnnyChimpo · 29-01-2020 1:51pm

The_Conductor wrote: »

Personally, in an era of full employment- and CSO audited wage increases of 4.1% on average in 2019, I believe moving away from the HTB scheme altogether and towards an SSIA scheme structured in such a manner that it didn't have a defined end date- would be a more profitable manner of assisting first time buyers (and indeed subsequent purchasers) towards saving up the magical deposit requirements.

The fact that the HTB scheme is just for FTB and that its only for new properties- are two factors that critically need to be addressed.

I agree this is the crucial element that's being overlooked, if we're talking about demand-side solutions

cruizer101 · 29-01-2020 2:30pm

Anecdotal only, but I know of a number of people who got htb but already has a deposit saved, so for them there was no bringing forward when they could buy they were buying anyway. So in those cases, which I suspect is a high enough amount of the cases, there was no advantage, the houses just went up in price which was covered by htb.

The_Conductor · 29-01-2020 2:40pm

cruizer101 wrote: »

Anecdotal only, but I know of a number of people who got htb but already has a deposit saved, so for them there was no bringing forward when they could buy they were buying anyway. So in those cases, which I suspect is a high enough amount of the cases, there was no advantage, the houses just went up in price which was covered by htb.

Ditto- offhand, and its anecdotal, I know of 7 colleagues and family members who had a deposit saved up and 2 who didn't- all of whom qualified for HTB.

There are some people out there who it does assist with getting a deposit together- there are others who through hard graft and hardship, managed to save the deposit on their own reconnaissance, despite having to pay rent (and in several cases childcare costs).

It helped some people who might not otherwise have had their full 10% deposit- others- it paid for the increase in price- and/or lowered the LTV ratio slightly.

Either way- it was incremented onto the house price- so the borrower ended up paying the extra 20k to the developer.

Deposit rules were bent at the outset to allow HTB go towards deposits- the original plan was that it did not qualify- that has to be kept in mind too- this was a sop for developers- and a few people who were having difficulty getting their deposits together benefited- but at the cost of a more expensive house than it would otherwise have been.

The RTE Investigates programme was very clear cut- the full 20k was immediately (within 6 weeks of the launch of the scheme) fully accounted for in price increases nationally.

awec · 29-01-2020 3:09pm

The_Conductor wrote: »

Ditto- offhand, and its anecdotal, I know of 7 colleagues and family members who had a deposit saved up and 2 who didn't- all of whom qualified for HTB.

There are some people out there who it does assist with getting a deposit together- there are others who through hard graft and hardship, managed to save the deposit on their own reconnaissance, despite having to pay rent (and in several cases childcare costs).

It helped some people who might not otherwise have had their full 10% deposit- others- it paid for the increase in price- and/or lowered the LTV ratio slightly.

Either way- it was incremented onto the house price- so the borrower ended up paying the extra 20k to the developer.

Deposit rules were bent at the outset to allow HTB go towards deposits- the original plan was that it did not qualify- that has to be kept in mind too- this was a sop for developers- and a few people who were having difficulty getting their deposits together benefited- but at the cost of a more expensive house than it would otherwise have been.

The RTE Investigates programme was very clear cut- the full 20k was immediately (within 6 weeks of the launch of the scheme) fully accounted for in price increases nationally.

It's unfortunate that your insinuation here is that only people who saved their deposits without HTB worked hard to get it.

I would think for the overwhelming majority of cases, the HTB brought forward house purchases for first time buyers. I have as much evidence to back this up as you have for your view (i.e. none), but I would be surprised if it didn't.

I guess if purely anecdotal evidence is what we're going on then every single person I have ever met who has used HTB would not have been able to buy a house at that time without it.

Trading 20k over 25/30 years for 20k in your hand right now, when that 20k is the difference between you buying a house or not? Good deal. Yes, the money goes into the developers pocket, but alas that was one of the points all along. Incentivize house building and make it a easier for first time buyers to get out of rental property. It is hard to argue that it has not been a success on both fronts.

Of course, in the property market there are also people who lose out. People trying to sell second hand houses will have suddenly found it difficult to flog their house to first time buyers. You could argue the HTB should be extended to second hand property. I would disagree, as this does not help with increasing the housing stock. People who were ready to buy whenever the HTB came into force will have suddenly found increased competition when buying houses. It's unfortunate for sure.

But to suggest the sole beneficiary is developers? Don't think that really adds up. By and large, FTBs have absolutely and unequivocally benefited from this scheme. Whether or not it's time to end it is another story.

Wildly Boaring · 29-01-2020 3:18pm

People who were ready without HTB could all avail of these magical cheap secondhand houses floating about everywhere with no competition from FTB who needed HTB

car_radio19834 · 29-01-2020 3:19pm

No one I know who got HTB actually needed it. The ones who are using it are the ones in high paying jobs but commuting from cheaper housing areas like the midlands.

The_Conductor · 29-01-2020 4:05pm

car_radio19834 wrote: »

No one I know who got HTB actually needed it. The ones who are using it are the ones in high paying jobs but commuting from cheaper housing areas like the midlands.

There was a cohort who it did help.
The problem was this cohort all gained instant access to 20k to put towards deposits- at a time when supply was a lot more constrained than it currently is- and promptly chased prices higher...….

The statistics that show FTBs dominating the new market and subsequent buyers in low single percentages- speaks volumes (though we have to be cognisant of the new development of the housing associations, REITs, Local Authorities and others having cornered fully 50% of the new builds)- speak volumes.

First time buyers who bought a new build (or built themselves) got a shot in the arm with HTB- insofar as it assisted with deposits- which is why the developers were able to fully increment it onto asking prices- hell the FTBs weren't going to argue with them. Everyone else paid for this largess- and continue to do so.

An SSIA scheme without an end date- with variable incentives for different groups- such as 10% general top-up rate for everyone- rising to a 25% topup rate for FTBs- providing it was subsequently used to purchase property, reducing back to the 10% if it was used for other purposes- subject to a max annual top-up (of perhaps 6-7k), but no limit on how many years you could save for, and no end date- has merit.

The current scheme is giving an unfair advantage to a segment of purchasers- such that they are cornering the entire new-build sector (that is available on the open market)- isn't fair.

Not every non-first time buyer currently owns property- and of those that do- not all of them have any meaningful equity in their property. Increasing numbers are making do living in dwellings that are unsuitable for their needs and/or in dire need of refurbishment- or significant work.

The HTB scheme refunding tax- is attractive to some people- because they tick all the boxes. Others- who don't- are getting left behind. And the whole time the scheme is being funded by tax payers and ultimately benefiting private sectors developers. Does not compute...……

LJ12345 · 29-01-2020 4:29pm

What’s the value of the new build houses going back to market within 12 months of purchase? It must happen - have they lost value.

awec · 29-01-2020 4:31pm

It’s a tax refund. You cannot get a cent more than you’ve paid in tax. Of course those who contribute the most will benefit the most, those who contribute less will benefit less.

People who build houses benefit from scheme to incentivise building houses. People who need deposits benefit from scheme to aid with deposits. It’s hardly a shock?

The_Conductor · 29-01-2020 4:41pm

LJ12345 wrote: »

What’s the value of the new build houses going back to market within 12 months of purchase? It must happen - have they lost value.

I don't know- but I imagine its rare, as there are a lot of transactional costs associated with buying and selling property (Estate Agent fees etc etc). You'd need prices to be rising by at least 1.5-2% to break even- stagnant prices or falling prices, and you're in the red.

LJ12345 · 29-01-2020 4:49pm

The_Conductor wrote: »

I don't know- but I imagine its rare, as there are a lot of transactional costs associated with buying and selling property (Estate Agent fees etc etc). You'd need prices to be rising by at least 1.5-2% to break even- stagnant prices or falling prices, and you're in the red.

Agree 100%, but I’d say it happens or will happen, it would be very interesting if the second hand value of these new houses drops or even drops in line with the rest of the market. The FTB purchaser wouldn’t lose but it would mean the value of the new builds was certainly inflated by the government.

If there’s a drop in value it’s certainly a disincentive for second time buyers who might prefer an A rated home and channels first time buyers into new builds who might prefer a more established area with a bigger garden... it’s not a great approach to building new houses.

awec · 29-01-2020 5:03pm

The_Conductor wrote: »

I don't know- but I imagine its rare, as there are a lot of transactional costs associated with buying and selling property (Estate Agent fees etc etc). You'd need prices to be rising by at least 1.5-2% to break even- stagnant prices or falling prices, and you're in the red.

I'm pretty sure you also have to pay back your HTB money if you sell within 5 years or something.

Basically, it would be very rare because you'd definitely be losing money. The number of ~1 year old houses on the second hand market must be miniscule.

Wildly Boaring · 29-01-2020 5:09pm

Also new house price do include VAT.
I realize people only look at the headline figures but hard to scrap back every part of the cost inc VAT in a sale

The_Conductor · 29-01-2020 5:20pm

awec wrote: »

It’s a tax refund. You cannot get a cent more than you’ve paid in tax. Of course those who contribute the most will benefit the most, those who contribute less will benefit less.

People who build houses benefit from scheme to incentivise building houses. People who need deposits benefit from scheme to aid with deposits. It’s hardly a shock?

The scheme was sold as a help-to-buy scheme- and a decision to allow people use the 20k as a deposit was only made after the fact. It was not allowed at the outset. Keep in mind the politicians and the Central bank were singing off two entirely different hymn sheets- which is how FTBs have a 10% deposit requirement versus a 20% requirement for everyone else. The 20% requirement for subsequent purchasers is as much an impossible target for a majority of subsequent purchasers as is the 10% for FTBs- yet the FTBs get a hand-out for their 10% but the subsequent buyers don't.

My proposal is a tiered SSIA scheme is a different top-up percentage for different groups of people- but allow everyone enter the SSIA scheme- and have a default top-up treatment for those who don't use their SSIA account for a deposit- and also- most importantly, don't have an end-date on the scheme- so you don't end up with a cohort of people all entering the market at the same time.

You and I obviously have different opinions on whether the HTB scheme, as it stands, has helped matters and for whom it has helped matters. Looking solely at the manner it was amended after it was drafted- to allow it be used for deposits- seems to me to be the sole beneficial manner in which it has helped FTBs- given the entire sum was immediately incremented onto the purchase price for houses.

Any new scheme has to be more open- and has to be open to second hand property- and non-FTB purchasers.

The_Conductor · 29-01-2020 5:23pm

awec wrote: »

I'm pretty sure you also have to pay back your HTB money if you sell within 5 years or something.

Basically, it would be very rare because you'd definitely be losing money. The number of ~1 year old houses on the second hand market must be miniscule.

You could well be right- I need to re-read all the rules of the scheme when I get a chance. It would make sense though- why should you incentivise someone who is flipping a property...….

awec · 29-01-2020 5:25pm

The_Conductor wrote: »

You could well be right- I need to re-read all the rules of the scheme when I get a chance. It would make sense though- why should you incentivise someone who is flipping a property...….

The rule is that at least one of the persons who got the HTB money must live in the property, not that you can't sell it. So you couldn't start renting it out either.

If you sell/rent in the first year you've to pay 100% of the HTB money back. Every year that amount decreases by 20%, until year 6 when you can obviously sell with no penalty.

It's exactly for that reason, stop people immediately cashing in.

SozBbz · 29-01-2020 5:26pm

The_Conductor wrote: »

I don't know- but I imagine its rare, as there are a lot of transactional costs associated with buying and selling property (Estate Agent fees etc etc). You'd need prices to be rising by at least 1.5-2% to break even- stagnant prices or falling prices, and you're in the red.

I've friends who did this.

Bought a new build in a commuter county but couldn't hack the lifestyle (especially the commute) and sold up and bought a 2 up 2 down right in the city center - night and day scenario.

Bought in 2017 and sold a year later. They struggled to get back what they paid and it was very stressful for them. I think the accepted an offer slightly under what they paid and when you factor in additional buying and selling costs, they definitely cost themselves money going for the new shiny house only to regret it such a short time later.

awec · 29-01-2020 5:31pm

SozBbz wrote: »

I've friends who did this.

Bought a new build in a commuter county but couldn't hack the lifestyle (especially the commute) and sold up and bought a 2 up 2 down right in the city center - night and day scenario.

Bought in 2017 and sold a year later. They struggled to get back what they paid and it was very stressful for them. I think the accepted an offer slightly under what they paid and when you factor in additional buying and selling costs, they definitely cost themselves money going for the new shiny house only to regret it such a short time later.

HTB money or no HTB money you'd be doing well to flip a property in 1 year and not make a loss when you take into account all the extra costs with buying.

Unless prices are absolutely rocketing up.

SozBbz · 29-01-2020 5:39pm

awec wrote: »

HTB money or no HTB money you'd be doing well to flip a property in 1 year and not make a loss when you take into account all the extra costs with buying.

Unless prices are absolutely rocketing up.

Oh true, but really what I think the issue was was that the bought on the outskirts of a town that was just too far away.

When they tried to sell only 12 months later, the house was no longer new so they were less attractive to FTBs.

They took a hit on loss of HTB money (liable for refund as less than 5 years), slight loss on the value of the house, and then they had buying and selling costs again. If I had to guess, I'd say the whole folly probably cost them around €30/40k.

But the lifestyle was killing them, commutes of up to 2 hours each way, coupled with no real sense of community in the town. The knew no one there when they arrived and I'd say bar saying polite hello's to immediate neighbours, that hadnt changed 12 months later. It didnt make any financial sense, but I guess they just knew they had to take the hit.

The_Conductor · 29-01-2020 5:40pm

awec wrote: »

HTB money or no HTB money you'd be doing well to flip a property in 1 year and not make a loss when you take into account all the extra costs with buying.

Unless prices are absolutely rocketing up.

There is also the fact that they're no longer eligible for the HTB grant- so the subsequent purchase will be so much more difficult for them...… No HTB grant to assist with the deposit, and a deposit requirement of 20% versus 10%...……..

Marius34 · 29-01-2020 5:51pm

New houses are bought not only by FTB. I can't imagine, that same property sold on second hand market looses 5% in value.. Maybe 1-2%, but not 5%. As a second time buyer wanting to buy A/B rated new or recently built I would look what can I get best for value. And what if HTB incentive would be 100K? Identical houses would be 100K different in price value depending if it's sold as new or Second hand?

The_Conductor · 29-01-2020 6:06pm

Marius34 wrote: »

New houses are bought not only by FTB. I can't imagine, that same property sold on second hand market looses 5% in value.. Maybe 1-2%, but not 5%. As a second time buyer wanting to buy A/B rated new or recently built I would look what can I get best for value. And what if HTB incentive would be 100K? Identical houses would be 100K different in price value depending if it's sold as new or Second hand?

Fewer than half of all new houses make the open market (fully half are snapped up by REITs, Housing Associations, Local Authorities, Vulture Funds etc). Of those that do make the open market- a FTB has half the deposit requirement of a non-FTB- and they get a 20k 'grant' (tax rebate) into their hands which can be used towards the deposit- with similar lending multiples as for any other purchaser. Aka- the playing field is massively tilted in favour of the FTB- subsequent buyers are not excluded from the market- however, the cards are stacked against them. On the other hand- a secondhand property has no such HTB grant towards the deposit for a prospective buyer- however, the FTB is still incentivised over a subsequent buyer- by virtue of the lower deposit requirement.

There is active assistance towards FTBs- through both the deposit rules- and also they qualify for a tax rebate that subsequent purchasers do not.

I can easily imagine a 1 year old property loosing some of its initial price- to what extent depends on a lot of factors, not least of which is the prevailing state of the market- aka if average prices are rising by 3-4% (possible in some areas) its unlikely that a 1 year old property will suffer too badly in its resale price- however, all things else being equal, it would be more attractive to a subsequent buyer- who gets the A-B house at a discount, than a FTB who won't get their 'grant' towards its purchase.

Its all hypothetical- and every situation is unique- you could end up in a situation where there was little interest in a property and have to discount it further to shift it- or you could get a bidding war- and a boon...….

Either way- you really have to appreciate just how different a FTB is from someone else- and once you see what governs a FTB- any divergence from this governance- makes it less likely that a FTB will buy your house- and more likely that a subsequent buyer has a better shout-in on it.

The 10% and 20% deposit requirements are tough barriers for everyone- but a FTB gets a massive help towards their 10%- when this help is taken out of the equation- its massive, its terminal for many FTBs- unless there is a fundamental reason for them to look at a secondhand property- such as a massive discount on what it would otherwise cost. As for the non-subsequent buyer and the 20% deposit requirement- bridging loans used exist for covering the time between selling a property and buying a new one- and once upon a time people had sizeable equity in their homes. Bridging loans no longer exist- and lots of people do not have sizeable equity in their homes, even if they're not in negative equity...….. So- they're stuck.

awec · 29-01-2020 6:16pm

Yea but STBs have means available to them that FTBs do not. STBs have been paying a mortgage instead of paying rent, they may have equity available to them.

Though I do accept that argument about the 10% versus 20%, but I can also see why it's like that. Asking a lot for someone to save 20% of today's prices from scratch with today's rent prices.

Marius34 · 29-01-2020 6:24pm

I'm aware that HTB, is quite small portion of new property. Around 5K, same STB for new property around 5K. So it's equal number of players in new builds. I do agree that Central Bank has big impact on Price, what seems not releastic, that 5% incentives, directly associated with 5% increase of new build. More likely 2%

Queasy Tadpole · 29-01-2020 8:09pm

I'm looking to buy at the moment and is it me or has the market completely slowed down?

I was in this position last year and had to hold off, the difference in properties coming up for sale in my view is crazy.

Prices seem the same to me yet the availability of properties seems way lower.

The_Conductor · 29-01-2020 8:10pm

Marius34 wrote: »

I'm aware that HTB, is quite small portion of new property. Around 5K, same STB for new property around 5K. So it's equal number of players in new builds. I do agree that Central Bank has big impact on Price, what seems not releastic, that 5% incentives, directly associated with 5% increase of new build. More likely 2%

HTB is up to 20k or 5% of the value of a property- whichever is lower.
The STB needs a 20% deposit for a new property.
It most certainly is *not* an equal number of players in new builds- mortgage figures from the Central Bank depict this sharply.

I'm not clear what you're saying about 5% incentives and 5% increase in new builds. New builds increased from under a thousand units to over 20k units in 2019.

The Central bank rules are a 10% deposit requirement for First Time Buyers- and a 20% deposit for any subsequent buyers.

Can you clarify what you mean by 5% and 2% changes in build increases- I'd love to know what premise you're basing this on- and indeed, how it relates to the current situation we find ourselves in.

Eric Cartman · 29-01-2020 8:13pm

Queasy Tadpole wrote: »

I'm looking to buy at the moment and is it me or has the market completely slowed down?

I was in this position last year and had to hold off, the difference in properties coming up for sale in my view is crazy.

Prices seem the same to me yet the availability of properties seems way lower.

Giveaway election on at the moment
brexit 2 days away from properly kicking off
just out of broke january
values not going up as weve hit central bank caps
itll be another month before the market is sure what way things are panning out.

The_Conductor · 29-01-2020 8:15pm

Queasy Tadpole wrote: »

I'm looking to buy at the moment and is it me or has the market completely slowed down?

I was in this position last year and had to hold off, the difference in properties coming up for sale in my view is crazy.

Prices seem the same to me yet the availability of properties seems way lower.

The length of time to sell a property has lengthened considerably- much to the worry of estate agents. Some people are lowering prices to try and generate interest- however, the memo isn't out there yet, lots of people don't like what they're hearing and are holding out in the expectation that they'll get a better price if they hold off selling.

There are a lot of executor sales and sales of BTL properties out there at the moment- and the condition many of these in is pretty appalling.

Eric Cartman · 29-01-2020 8:21pm

The_Conductor wrote: »

The length of time to sell a property has lengthened considerably- much to the worry of estate agents. Some people are lowering prices to try and generate interest- however, the memo isn't out there yet, lots of people don't like what they're hearing and are holding out in the expectation that they'll get a better price if they hold off selling.

There are a lot of executor sales and sales of BTL properties out there at the moment- and the condition many of these in is pretty appalling.

this is the issue with the agents, supply is catching up and the CB cap hit really means the room for growth has ground to a halt but many in leafier parts are still in negative equity and the BTL market is trashed as small landlords cant afford to enter the market.

Marius34 · 29-01-2020 8:57pm

The_Conductor wrote: »

HTB is up to 20k or 5% of the value of a property- whichever is lower.
The STB needs a 20% deposit for a new property.
It most certainly is *not* an equal number of players in new builds- mortgage figures from the Central Bank depict this sharply.

I'm not clear what you're saying about 5% incentives and 5% increase in new builds. New builds increased from under a thousand units to over 20k units in 2019.

The Central bank rules are a 10% deposit requirement for First Time Buyers- and a 20% deposit for any subsequent buyers.

Can you clarify what you mean by 5% and 2% changes in build increases- I'd love to know what premise you're basing this on- and indeed, how it relates to the current situation we find ourselves in.

Sorry, for not being clear, I was in rush at the time of typing.
So, HTB scheme is a refund for FTB of 5% of the value of the property, up to €20,000.
In the previous post it was stated, that this is nothing but extra 20K for developers, or 20K in property price increase for New Builds. What I’m saying that this incentives does not really directly drive 5% or 20K in property price, as you need include other players (STB,Buy/Build2Let,Council), and overall demand/supply in order to estimate how much it drives the final price.

In regards of number of players, I meant for the New Builds. Which are roughly 5K properties for HTB, and 5K properties for STB in the year of 2019, meaning it similar numbers of HTB and STB in new build sector (I'm not including additional ~11K new builds for other players). Please let me know if you think otherwise, what would be your number for STB on New Builds, and how do you get it different?

fliball123 · 29-01-2020 9:19pm

Queasy Tadpole wrote: »

I'm looking to buy at the moment and is it me or has the market completely slowed down?

I was in this position last year and had to hold off, the difference in properties coming up for sale in my view is crazy.

Prices seem the same to me yet the availability of properties seems way lower.

A lot of sellers are holding off and are now renting out the property instead of selling with the 100% mortgage interest relief on a rental property you can have someone in there paying your mortgage while you move to a new house. So that is also starving supply. I think prices will stay put for the next year and with certainty on Brexit and once the G.E is done with and the goodies thrown at first time buyers come in then prices will go up. All parties are throwing money at FTBs and this raises prices. That is historically the case.

LJ12345 · 29-01-2020 9:42pm

awec wrote: »

Yea but STBs have means available to them that FTBs do not. STBs have been paying a mortgage instead of paying rent, they may have equity available to them.

Though I do accept that argument about the 10% versus 20%, but I can also see why it's like that. Asking a lot for someone to save 20% of today's prices from scratch with today's rent prices.

I struggle to understand the deposit requirements, the bias towards FTB above STB baffles me and I don’t understand how it’s supposed to prevent another housing crash - are they indicating second hand homes will devalue 10% more than a FTB newly built home would if a crash happened again.

tazdustdevil · 29-01-2020 10:15pm

It’s very unfair as many STB’s are those who were most impacted by the crash of 2009 and who if they became unintentional landlords also paid huge amounts in income tax. The whole system is rotten.

car_radio19834 · 29-01-2020 10:59pm

What's a single person supposed to do to afford a house?

Property Market 2020

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