Property Market 2018

Mickiemcfist · 22-01-2018 10:47am

Samuel T. Cogley wrote: »

Serious question: Is it profitable - as in viably profitable - to build in Dublin at the moment? Isn't that the argument builders are, of course, using?

It's pretty much just hit the price point where houses are worth building, the major issue is planning delays & the cost of finance up to planning approval, that's where the risk lies & so the interest rates can be c. 25%. It's also the reason there's very little building going on in the nicer areas of Dublin, much more likelihood of planning delays due to objections etc.

WRT apartments, the dual aspect restrictions means you can't sell them cheap as they require more land per apartment. Among many other planning rules. The break even point of a standard 2 bed apartment is c. 320k depending on the area

scheister · 22-01-2018 10:50am

its an interesting idea from what i can see. Lender of last resort is always handy. To apply you need to have been turned down by 2 banks. Someone on 36k per year who is single with no other borrowings can get €185,724.18 or 5 times their income.

It is a good way to get on the ladder for someone people. but can discourage people in other places. What happens if in mid process someone gets a pay increase to go above the limit?

Will people be in a place where they will ask their job to delay increased till they get the keys to a house if near the limit?

Browney7 · 22-01-2018 10:57am

Thou shalt buy, thou shalt buy.

The housing market manipulation (upwards) continues. This stinks of an election after the eight amendment referendum.

Don't build anything for a few years -"sure there's no money lads" - and create a significant panic and shortage of supply. Pump up the prices - we're all rich again.

Now the price hikes might run out of steam and there's an election on the horizon - let's throw money at people and get them to buy whatever firetrap apartments that our developer mates can fire up on state land. Keep the recovery going lads!

22-01-2018 11:00am

Usually I'd be dead set against this but it looks like it could suit me nicely. :pac:

hots · 22-01-2018 11:21am

Outkast_IRE wrote: »

I see the first time buyers loan scheme is getting revamped.

Sure some more Fuel on the Fire can only help things at this stage. The central bank werent playing ball with the government so the governemnt decided to circumvent the central bank rules altogether and offer interest rates massively lower than the private banks in the country ?

I would love a 2% interest rate, unfortunately my partner and i are silly enough to work for a living. Maybe one of us should just give up altogether.

https://www.rte.ie/news/enviroment/2018/0122/934974-murphy-housing-loan/

Brilliant, rewarding people less likely to be able to make repayments with a super-rate. People just over the thresholds will get punished nicely by this, we're over the thresholds and looking to buy ~350K range, exactly where this scheme will hit. Fantastic.

Barlett · 22-01-2018 11:27am

Is it not really just a new version of this ?

http://www.homechoiceloan.ie/Who-can-apply-.aspx

LookingFor · 22-01-2018 11:32am

New or not, the details of that are stomach-turning. If you are on 50K you'll be able to borrow as if you were on 80K in the private market.

i.e. if you are 50-80K you are screwed over. Competing with people earning less than you who can pay MORE. Substantially more.

A person on 60K can max borrow 210K vs a person on 50K able to borrow 278K on this scheme.

edit - and yeah, for whatever it is worth, write to your TDs. Wrote to Varadkar this morning.

Cyrus · 22-01-2018 11:49am

its another subsidy for low income families paid for in the main by people who appear to earn a lot more but whose effective tax rate is nearly double

A couple on a joint income of less than 75k. Effective rate of tax on a couple earning 74k is 19% v 35% paid by a couple earning double that.

hmmm · 22-01-2018 11:52am

LookingFor wrote: »

New or not, the details of that are stomach-turning. If you are on 50K you'll be able to borrow as if you were on 80K in the private market.

The prudent borrower who gets a mortgage for a lower amount, will be competing against someone who gets declined and is handed a higher mortgage by the government, and will pay a higher interest rate for the privilege.

Stupid scheme, completely stupid. Hopefully the Central Bank might have something to say.

Mantis Toboggan · 22-01-2018 11:56am

Do you have to get declined from the banks to get that government scheme?

hmmm · 22-01-2018 11:58am

Tyson Fury wrote: »

Do you have to get declined from the banks to get that government scheme?

http://rebuildingirelandhomeloan.ie/eligibility/

"provide evidence of insufficient offers of finance from two banks or building societies"

GingerLily · 22-01-2018 12:01pm

hmmm wrote: »

"provide evidence of insufficient offers of finance from two banks or building societies"

Probably a good idea to start gambling and buying rounds in Coppers to force the bank to decline you and get a better interest rate!!

Samuel T. Cogley · 22-01-2018 12:03pm

GingerLily wrote: »

Probably a good idea to start gambling and buying rounds in Coppers to force the bank to decline you and get a better interest rate!!

Not a decline, insufficient funding. A decline from a bank probably means a decline under this scheme. I also think if you can buy, even in a rougher area than you would like, you're probably going to be knocked back as well, but that's speculation.

This is going to hit the bottom of the market more than the 350K market, but obviously everything has a knock on effect.

shivermetimber · 22-01-2018 12:04pm

How do they expect you to get refusal from a bank? Do you simply go into them asking for way more then you know you will actually get?

sjb25 · 22-01-2018 12:04pm

[Deleted User] wrote: »

Usually I'd be dead set against this but it looks like it could suit me nicely. :pac:

Me to

I’m suddenly all for this

Samuel T. Cogley · 22-01-2018 12:05pm

shivermetimber wrote: »

How do they expect you to get refusal from a bank? Do you simply go into them asking for way more then you know you will actually get?

You either earn so little that no mortgage is big enough to buy a place full stop, or that the accommodation you can afford would be unsuitable.

As an aside I wonder if they're look for bigger deposits on one beds. I'm guessing not.

hmmm · 22-01-2018 12:07pm

GingerLily wrote: »

Probably a good idea to start gambling and buying rounds in Coppers to force the bank to decline you and get a better interest rate!!

Heh

Simple really.
"Dear bank, I earn 50k a year and would like to borrow 280k"
"Under Central Bank rules, no can do"
"Dear bank 2....."
"No"
"Dear government..."
"Have money! Money money money! Spend it on property!"

stryker mcqueen · 22-01-2018 12:11pm

Deleted User wrote: »

Usually I'd be dead set against this but it looks like it could suit me nicely. :pac:

Same here , wife is self employed since FEB 2015, business is good now but as with the majority of new ventures it took time, banks look for 2-3 years audited accounts, her average for the 3 years is peanuts , yet she is now better off than she has ever been. We have circa €30k saved (so far) for a deposit and have been paying rent for the last 5 years totaling around €60k yet told we cant afford a mortgage.

So this scheme sounds like it could suit us, I can understand why it wont suit a lot of others but everyone's situation is different .

LookingFor · 22-01-2018 12:14pm

Samuel T. Cogley wrote: »

You either earn so little that no mortgage is big enough to buy a place full stop, or that the accommodation you can afford would be unsuitable.

As an aside I wonder if they're look for bigger deposits on one beds. I'm guessing not.

Yeah, I wonder that too. Another perk - you need 20% deposits on the private market for one beds in Dublin.

I'm basically ****ed from all angles on this. I'm targeting a one-bed in Dublin, I earn just a little past the point of eligibility for that scheme. I have to earn more, save more, and pay more euro-for-euro on my mortgage - and will be able to afford less in the end. And very possibly get pushed out by people on a scheme like this who've been able to borrow more.

Moral hazard, how are ye.

Mickiemcfist · 22-01-2018 12:16pm

Does anyone know whats meant by "continuous employment" for the purposes of that mortgage? Is it same job or just employed for the last 2 years

draiochtanois · 22-01-2018 12:19pm

This post has been deleted.

Cuddlesworth · 22-01-2018 12:20pm

stryker mcqueen wrote: »

So this scheme sounds like it could suit us, I can understand why it wont suit a lot of others but everyone's situation is different .

Get int here quick then, because sub 350k is going to start rising damm fast again.

Bob24 · 22-01-2018 12:21pm

Outkast_IRE wrote: »

I see the first time buyers loan scheme is getting revamped.

Sure some more Fuel on the Fire can only help things at this stage. The central bank werent playing ball with the government so the governemnt decided to circumvent the central bank rules altogether and offer interest rates massively lower than the private banks in the country ?

I would love a 2% interest rate, unfortunately my partner and i are silly enough to work for a living. Maybe one of us should just give up altogether.

https://www.rte.ie/news/enviroment/2018/0122/934974-murphy-housing-loan/

I am sure everyone (at last the minister and the civil servants advising him) knows this is a receipt for huge trouble.

But yet the governement pushes it through because they see it as good for politics.

Truely disgusted by this. As another poster said we are running out of credible political parties.

LookingFor · 22-01-2018 12:25pm

draiochtanois wrote: »

This post has been deleted.

Given the market that would be targeted and the supply that's there at the moment, this actually seems like a fairly big number. There aren't a huge number of properties in Dublin in the 200-300K range. 550 extra people playing in that ballpark - and at the higher end of the scheme, able to pay substantially more than people on private mortgages earning up to €80K! - could have a non-negligible impact on the market.

mariaalice · 22-01-2018 12:27pm

Calm down its only for houses up to 320 ( in major urban areas ) its less outside of major areas, and those earning under 50k or two income 75k

hots · 22-01-2018 12:28pm

draiochtanois wrote: »

This post has been deleted.

550 in Dublin would be substantial enough, property in those price ranges are already fairly condensed into specific areas too.

LookingFor · 22-01-2018 12:30pm

hots wrote: »

550 in Dublin would be substantial enough, property in those price ranges are already fairly condensed into specific areas too.

Yep, if you've had a daft alert on that kind of price range in certain areas of Dublin over the last year, you'll know how small this pond can be. 550, or that kind of figure, would not be peanuts.

I've gone from being hopeful of buying something in the range I've had an eye on later this year to be virtually completely demoralised over the course of this morning.

Shelga · 22-01-2018 12:35pm

So someone on €49k can now borrow €242k under this scheme, yet someone earning €51k can only borrow €179k on the open market.

The mind boggles. How ****ing stupid are our politicians. Would they stop interfering in the market with rubbish like this, and focus on ways to lower the cost of building new properties. That is the only thing that is going to stabilise the market.

mariaalice · 22-01-2018 12:40pm

LookingFor wrote: »

Yep, if you've had a daft alert on that kind of price range in certain areas of Dublin over the last year, you'll know how small this pond can be. 550, or that kind of figure, would not be peanuts.

I've gone from being hopeful of buying something in the range I've had an eye later this year to be virtually completely demoralised over the course of this morning.

But while it will bring some more in to the market its only up to 320 they cant go any further or they loose the the deal.

Also

Say a couple both earning circi 35k each they would get a mortgage of up 270/280 depending on circumstance, but someone on their own earning 35k does not have a lot of options in Dublin so it could affect the single buyer on a modest income.

Wanderer78 · 22-01-2018 12:40pm

Shelga wrote: »

So someone on €49k can now borrow €242k under this scheme, yet someone earning €51k can only borrow €179k on the open market.

The mind boggles. How ****ing stupid are our politicians. Would they stop interfering in the market with rubbish like this, and focus on ways to lower the cost of building new properties. That is the only thing that is going to stabilise the market.

the 'mythical' market!;)

draiochtanois · 22-01-2018 12:40pm

This post has been deleted.

LookingFor · 22-01-2018 12:42pm

mariaalice wrote: »

But while it will bring some more in to the market its only up to 320 they cant go any further or they loose the the deal.

I earn more than this scheme's eligibility threshold and can't dream of being able to play with 320K. 320K is already way beyond that people in this bracket could previously have offered, and is beyond what people earning substantially more than them could offer without HUGE savings.

Again, someone on - say - 60K can only borrow 210K on the open market.

If they actually deliver on that full €200m of loans they say will be available, they will screw over a lot of people on 50-80K who are in that kind of market. Effectively those people will be placed behind those on 50K coming to the market via that scheme.

q85dw7osi4lebg · 22-01-2018 12:44pm

Can't see the central bank allowing this to work as is, without changes to their own regs on private loans.

hmmm · 22-01-2018 12:46pm

LookingFor wrote: »

Again, someone on - say - 60K can only borrow 210K on the open market.

If they actually deliver on that full 200m of loans they say will be available, they will screw over a lot of people on 50-80K who are in that kind of market.

It's a completely perverse initiative.

If you're someone hoping to buy a house in the future, and you or your partner is offered a raise at work, you may decide to not accept the raise or turn down the promotion.

We always get stupidity like this when government tries to interfere. They've offering a big pot of gold to encourage people to stay in low paying jobs.

robcass78 · 22-01-2018 1:10pm

House prices will continue to rise 8-10% as supply is still only less than 10,000 units nationally vs demand from population growth alone of about 50,000, which on 2.7 residents per home is 17,850. There's a cumulative undersupply of about 50,000 units from the past 5 years of undersupply. A housing wait list of 120,000 people vs a social home built rate of 800 a year. The pent-up demand of over 200,000 living at home is waiting to come to market, OR, they are starting to migrate, but still the net migration is inward, but dropping; used to be c35k Irish leaving a year, now down to 16k. At some point, if they decide to come back. The rise in interest rates next year and thereafter by 1-2% may put pressure, but if the rural banks proposal comes through Oireachtas, that sees home prices drop 20-30k on lower build interest costs, plus ongoing mortgage rates dropped from 3% to 1%, seeing mortgage costs drop for those who want a mortgage reduction. However, awareness of such a proposal amongst everyone is low right now, but starting to gain traction. http://www.thejournal.ie/public-banking-3807263-Jan2018/ I guess it requires people to say to TD's "I want 20k off my home price and 3-5k savings on mortgages a year" at which point, TD's may do something for their community? http://www.thejournal.ie/public-banking-3807263-Jan2018/ Obviously the banks will hate this, as will civil servants at Dept of finance, and try to kill it.

Cuddlesworth · 22-01-2018 1:33pm

Eleanor Howling Anorexic wrote: »

Can't see the central bank allowing this to work as is, without changes to their own regs on private loans.

Central bank has a form of control over the private banks. Not over the government. As stupid as this is, I can't see them stopping it.

q85dw7osi4lebg · 22-01-2018 1:45pm

Cuddlesworth wrote: »

Central bank has a form of control over the private banks. Not over the government. As stupid as this is, I can't see them stopping it.

Agree, but I mean that they may need to make changes to the regs surrounding private banks offerings, as suddenly a large % population would be mad to pursue a traditional mortgage.

mel123 · 22-01-2018 1:47pm

Another incentive that doesnt help NON first time buyers at all, drives the prices up for everyone and decreases availability even more as more people try and jump on a ladder they cant afford anyway just because the scheme is there
The government going against CB rules, like what a joke!!!!

seamus · 22-01-2018 1:47pm

Eleanor Howling Anorexic wrote: »

Agree, but I mean that they may need to make changes to the regs surrounding private banks offerings, as suddenly a large % population would be mad to pursue a traditional mortgage.

They still have to though.

The application to the state mortgage company has to be accompanied by documents showing that the banks were offering insufficient finance.

I wouldn't be surprised if this ends up being a complete farce, where someone puts in their application and gets approved 2 years after they've already bought with the bank's "insufficient" finance offer.

The paperwork that the banks ask for is big and takes time to process. And they're relatively (!) efficient at is because this is their bread and butter. The state isn't going to throw money at people who can't repay it (one would hope), so they'll have to process paperwork too, and they're not going to be nearly as efficient.

So there's every chance that this looks good for FTBs on paper, but in practice it ends being something that only a lucky few ever actually get through.

robcass78 · 22-01-2018 1:58pm

Eleanor Howling Anorexic wrote: »

Agree, but I mean that they may need to make changes to the regs surrounding private banks offerings, as suddenly a large % population would be mad to pursue a traditional mortgage.

Central bank could have a) mandated banks to lend given they are only lending 20% of required new build lending loans vs 13 year rolling average, which results in the supply of homes being 4 times less than required (causing the 5 year price rises of 60%) b) they could also mandate lending at interest rates on par with EU average rather than 3 times EU average for home build construction loans, which adds 20-30k to home price and c) mandate banks that interest rates are in line with EU average, not 3 times the interest rate (3% vs 1%), which equates to 3-5k in overpayment of interest rates.

Central bank is supposed to manage risk, but have seen price rises of 60% in 5 years, and allow the banks to overcharge, that's not risk, but now an issue (financially, economically in the overcharging aspect and socially in the 200,000 living at home and the 8.000 homeless). That's a bubble. We, taxpayers, own the banks, but Central bank is separate to government (who own the banks). It requires the Dept of finance to change the rules, but in 6 years, that's not happened, so you really think in the next 6 years they'll do anything?

The only thing is asking Local TD's to support solutions: 1. Build more houses socially and privately (latter requires funding) and 2. increase competition so that financial system lends.

3. regional community banks are one help http://www.thejournal.ie/public-banking-3807263-Jan2018/) and could be live within 6-12 months, but it suits that the banks overcharge by 6bn a year and homes not built, as it supports payments to landlords by taxpayers (1.8bn; up 47% a year. Well in advance of inflation and pay rises.)

Cuddlesworth · 22-01-2018 3:12pm

The central bank isn't there to calm the housing market, they are there to stop future Zombie banks after the mistakes they made last time.

If you think things are bad now, they would certainly be worse without lending restrictions.

LookingFor · 22-01-2018 3:16pm

Cuddlesworth wrote: »

The central bank isn't there to calm the housing market, they are there to stop future Zombie banks after the mistakes they made last time.

If you think things are bad now, they would certainly be worse without lending restrictions.

Which the government is now bypassing :rolleyes:

Anyone earning 50-80K looking to buy a home up to 320K - your taxes are going to help sub-prime borrowers break the rules and outbid you on the market.

KellyXX · 22-01-2018 3:27pm

I was thinking of taking a year off work.so this would be great.
I leave my job, our hubbys income is now just under threshold.
Sweet 2% mortgage for 20 years or so, spare money invested earning 4% or more, a year off work. I'm I'm.

GingerLily · 22-01-2018 3:31pm

LookingFor wrote: »

Which the government is now bypassing :rolleyes:

Anyone earning 50-80K looking to buy a home up to 320K - your taxes are going to help sub-prime borrowers break the rules and outbid you on the market.

Its ridiculous, you can just ask the bank for a mortgage now for > 5 times your income, the banks will have to refuse you and you can then get this deal.

So so stupid....

markodaly · 22-01-2018 3:55pm

Eleanor Howling Anorexic wrote: »

Can't see the central bank allowing this to work as is, without changes to their own regs on private loans.

Is this governed by the Central Bank though? It is effectively state own competition to the bank and private market. Cant see the banks, the ECB or Europe being happy about this.

robcass78 · 22-01-2018 6:06pm

Cuddlesworth wrote: »

The central bank isn't there to calm the housing market, they are there to stop future Zombie banks after the mistakes they made last time.

If you think things are bad now, they would certainly be worse without lending restrictions.

I'm not saying restrict lending; I'm saying build houses in line with population growth.

You're saying it's ok for the Irish banks, bailed out by taxpayers, to generate the highest-in-EU profits, highest-in-EU-capital ratios at the social cost of housing & economic constraint (low construction rate is knocking 6bn off GDP; about 4%), whilst adding that 6bn overcharge to debt on high interest rates (about 3k per household per year), with social housing landlord payments of 850m a year also picked up by taxpayers in higher tax rates due to the lack of private & social homes?

You're also saying it's ok, when the central banks themselves & ECB define the Irish banking sector as the least competitive (as assessed using HHI ratio) in Europe; have I got that right?

That logic that the banks may have to be restrained would have been ok 15 years ago when construction was in excess of demand, but currently construction is 80% less than demand.

Until the supply issue (labour in construction, financing & councils & central govt planning speed reduced) are fixed, the prices are going to continue to go up, and the economy slow (with FDI /job growth slowing), against a backdrop of rising interest rates by 2019 putting a further strain on incomes.

Rob

Villa05 · 22-01-2018 6:18pm

Cyrus wrote:

its another subsidy for low income families paid for in the main by people who appear to earn a lot more but whose effective tax rate is nearly double

One of the core issues hindering supply is the availability of competitive loans to developers. I believe interest rates for developing property are in the double digits.

The Government giving more money to fuel the demand side while completely ignoring supply side issues is more evidence that they are a big part of the problem.

We are firmly in a bubble and the government is complicit in fully supporting it.

They have seen that the central bank rules have taken some air out of the bubble and have been trying to circumvent those rules for some time.

In a normal economy a person on the salary levels spoken about which are way over the average income should have no issues in housing themselves

Samuel T. Cogley · 22-01-2018 6:20pm

GingerLily wrote: »

Its ridiculous, you can just ask the bank for a mortgage now for > 5 times your income, the banks will have to refuse you and you can then get this deal.

So so stupid....

That's not how this is going to work. It will also severely limit one's choice in Dublin. You can't get a three bed terrace in Kilbarrack now for 320K.

The idea is that you can't get suitable accommodation not that you were refused for being a plank.

phunkadelic · 22-01-2018 6:20pm

Anyone know the story with banks making exceptions to the Central bank restrictions?
eg. the 20% limit of exceptions to the 3.5 loan-to-income restriction in a year.
Does that reset on 31st December in a year?

Villa05 · 22-01-2018 6:23pm

phunkadelic wrote:

Anyone know the story with banks making exceptions to the Central bank restrictions? eg. the 20% limit of exceptions to the 3.5 loan-to-income restriction in a year. Does that reset on 31st December in a year?

Think it's been changed to 10%

Property Market 2018

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