Buyer bubble burst...

beeno67

Calina wrote: »

The average salary for a nurse with between 10 and 19 years of service is 39KE. Here is the source for that figure. As for gardai, I have not looked.

That being said, whether you like it or not, 50K is a high salary. There are people who are trying to raise families for less. The other issue is you are assuming that two salaries will always be available for semiD purchase. People need to have babies so no they are not.

The only way housing has been made more affordable for the last four or five years is by increasing mortgage terms and upping permitted LTVs. UNfortunately, the banks have wised up to the folly of high LTVs and are demanding deposits which people have to save now and that takes time. Reducing income tax shouldn't be directly for the benefit of banks but if increased spending power is going into mortgages, then that's exactly what is happening.

More accurate figures for nurses pay are available from HSE. Nurses like many state employees get many extra payments beyond there basic pay.
http://www.hse.ie/eng/newsmedia/2007_Archive/March_2007_/Current_Nurses_Dispute.html
Also why should someone on 50k be able to afford a semi d house? About 70% of people in this country own property, a very high figure which shows homes are affordable. 30% do not, this figure has not changed a lot during last 12 years. So you should not look at average wages but the average wage of the richest 70% of people.

SimpleSam06

beeno67 wrote: »

70% of people in this country own property, a very high figure

Where did you get this figure from?

gurramok

beeno67 wrote: »

More accurate figures for nurses pay are available from HSE. Nurses like many state employees get many extra payments beyond there basic pay.
http://www.hse.ie/eng/newsmedia/2007_Archive/March_2007_/Current_Nurses_Dispute.html
Also why should someone on 50k be able to afford a semi d house? About 70% of people in this country own property, a very high figure which shows homes are affordable. 30% do not, this figure has not changed a lot during last 12 years. So you should not look at average wages but the average wage of the richest 70% of people.

Hold on a minute, you seem to look at incomes with rose tinted glasses.

What we know is that 78% of the entire workforce earn under 35.4k. This a FACT from the govt budget website http://www.budget.gov.ie/2008/downloads/DistributionOfIncome.xls

To you and me, its damn obvious that anyone on 50k is on a good wage and they are in the minority of earners. The other 80% cope along on sub 35.4k.

That 70% figure might have gone up if the bubble didn't lock so many out in the last 5+yrs and i suspect the under 35 generation are not sufficently represented in it if that 70% figure is real.

gurramok

beeno67 wrote: »

€50k is not high income. It is well less than the average nurse or garda. So for example 2 nurses married on average salary (excluding overtime) earn about €110,000. So the average house price is about 3 times their joint salary. Also in the last 10 years the amount of income tax people pay has dropped greatly, making housing much more affordable.

Where did you get the average salary for a nurse at 55k?

It dont say it on that link, you seem to be plucking figures out of the air!! (even staff nurse salaries are not in your range)

Here's more figures for ya for various professions from 2005, i doubt salaries for nurses have risen from 32k to 50k in 3 yrs

http://www.bankofscotland.ie/index.jsp?1nID=93&2nID=119&nID=177&aID=254

Halifax wrote:

An average salary of E51,187 for secondary teachers – sourced from Public sector employment and earnings Dec 2005 (CSO)
· An average salary of E42,834 for primary teachers – sourced from Public sector employment and earnings Dec 2005 (CSO)
· An average salary of E51,673 for Gardai - sourced from Public sector employment and earnings Dec 2005 (CSO)- note this excludes over-time.
· An average salary of E32,408 for nurses - sources from the Irish nurses Organisation - pay relates to a Staff Nurse at the fourth grading point
· An average salary of E34,307 for firefighters – sourced from the report of public sector benchmarking 2002 and uprated to 2005 using the average increase in local authority earnings up to Dec 2005.

BigglesMcGee

People 50K is not a high salary.
If you think it is, then like me and my car, you should rethink you're aims in life.

I personlly know very few people on less than 50k who are over 30.

Calina

beeno67 wrote: »

More accurate figures for nurses pay are available from HSE. Nurses like many state employees get many extra payments beyond there basic pay.
http://www.hse.ie/eng/newsmedia/2007_Archive/March_2007_/Current_Nurses_Dispute.html
Also why should someone on 50k be able to afford a semi d house? About 70% of people in this country own property, a very high figure which shows homes are affordable. 30% do not, this figure has not changed a lot during last 12 years. So you should not look at average wages but the average wage of the richest 70% of people.

The HSE figures are PR in the face of industrial action. They will be weighted in favour of showing the nurses in a negative life.

Secondly, why should someone earning more than 40% more than what 78% of the working population earns NOT be able to afford a semiD?

Also the problem in the property market is that new entrants are locked out. You need to look at the average wage of those who don't own property and work out why they are not buying property if you want the property market to stop sliding. Without new entrants the market is basically stalled.

Calina

BigglesMcGee wrote: »

People 50K is not a high salary.
If you think it is, then like me and my car, you should rethink you're aims in life.

I personlly know very few people on less than 50k who are over 30.

Biggles, apart from the housing issue, anyone on 50K can have a comfortable lifestyle. Sometimes, people don't consider the highest salary to be the ultimate aim in life. This country appears to value people on that, and it coincides with increasing drug usage and suicide rates.

My aim in life is to be happy with what I do. I am happy with what I do. I don't think I'd be any happier being more stressed and earning more money than I do. If you think that the highest salary should be the sole aim in life then in a way, I pity you and I understand now why this country is in a total mess.

gurramok

BigglesMcGee wrote: »

People 50K is not a high salary.
If you think it is, then like me and my car, you should rethink you're aims in life.

I personlly know very few people on less than 50k who are over 30.

Fundamentally disagree

50k is €3,154 net pay a month (without pension) from http://www.taxcalc.eu/

What on earth are you spending 3k a month on in that you are not comfy??

Biggles, think outside the box(your profession and look at big picture). I know quite alot of people earning under 50k in the IT sector(only a couple of manager types earn over 50k, the rest at a ratio of maybe 30:1 earn under 50k and alot are over 30)

As i stated above, 80% of the workforce earn below what you earn, and you think you have it bad

beeno67

gurramok wrote: »

Where did you get the average salary for a nurse at 55k?

It dont say it on that link, you seem to be plucking figures out of the air!! (even staff nurse salaries are not in your range)

Yes your right. The link said 56000 but I wasn't going to quibble over 1000.

beeno67

gurramok wrote: »

Hold on a minute, you seem to look at incomes with rose tinted glasses.

What we know is that 78% of the entire workforce earn under 35.4k. This a FACT from the govt budget website http://www.budget.gov.ie/2008/downloads/DistributionOfIncome.xls

quote]
This is not a fact. It says that this % are paying tax at this rate. It includes part time workers and pensioners. We also know as a fact that some millionaires pay tax at standard rate so they would be included in this 78%.

beeno67

SimpleSam06 wrote: »

Where did you get this figure from?

CSO. It is actually 75%

Calina

beeno67 wrote: »

Yes your right. The link said 56000 but I wasn't going to quibble over 1000.

Looking at the chart again, the only figure even analagous that I can find is the 55558 for a CNM2 which is max of scale salary.

I'm not equating that with "average nursing salary" at all.

gurramok

beeno67 wrote: »

This is not a fact. It says that this % are paying tax at this rate. It includes part time workers and pensioners. We also know as a fact that some millionaires pay tax at standard rate so they would be included in this 78%.

Good grief.

Yes it includes part time workers (pensioners we have to figure out that part, are they classified as part of the workforce like the unemployed as available for work?, If so, proof is needed. I doubt it as they maybe classified as dependents).

Now the millionaires part, thats quite funny to consider them as domociled tax paying residents at the standard rate.

From memory, was it said there are 30,000 money millionaires in the country?

And i think it was the Irish Times who exposed a couple of hundred who didnt pay their fair amount of tax.

So to sum up, it's a miniscule number to be considered to affect the overall profile of the workforce

BigglesMcGee

Calina wrote: »

Biggles, apart from the housing issue, anyone on 50K can have a comfortable lifestyle. Sometimes, people don't consider the highest salary to be the ultimate aim in life. This country appears to value people on that, and it coincides with increasing drug usage and suicide rates.

My aim in life is to be happy with what I do. I am happy with what I do. I don't think I'd be any happier being more stressed and earning more money than I do. If you think that the highest salary should be the sole aim in life then in a way, I pity you and I understand now why this country is in a total mess.

We are not talking about happiness or satisfaction here. We are talking about having the salary to be able to afford a home are we not. Just because someone earns a low wage does not entitle them to be able to afford to buy a house. House are not cheap, never were and never will be. But that said i think they are priced too high at the moment anyway.

I am happy and satisfied and love my job and am not stressed (didnt even know the meaning of the word before i got Ice broadband). Everyone i know or my family is not in the same line of work as me. Yet 85% of them earn over 50k.

And i refuse to be satisfied on just a living wage.

I save money, I spend money, i give money to charity, I give money to family, i take lots of holidays and i love my gadgets. All of this makes me much happier than if i couldnt afford it.

Hapiness is not based on your salary, but it sure is effected by it.

I think we're getting a little off the topic of a renters bubble though.

Calina

BigglesMcGee wrote: »

And i refuse to be satisfied on just a living wage.

50K is well more than a living wage. Well more than it. If you think it is at best a living wage, then there is a problem. I am not asking you to justify your salary to me, I am asking you to justify your view that 50K is a low salary/wage. You are signally failing to do this. There is a set of statistics around telling you it's above the median income in this country. You haven't addressed one single point raised by gurramok in this respect.

The end result is this. 50K is a decent salary. It's even considered high by the Revenue Commissioners because they tax it at that rate. The key reasons that house prices have gone up in the past 5 or 6 years has little to do with economic fundamentals and everything to do with ease of access to credit. And to keep the kettle boiling the banks had to go further and further and further. We got to mortgage offers of 8 times income, 100% LTVs and mortgage terms of 40 years. In an era of a) falling taxes and b) unprecedentedly low interest rates this is completely ridiculous.

Two things are happening 1) rental supply is rising 2) sales supply is rising.

This suggests we have an excess of supply of housing over housing needs.


There is no good reason for people on average incomes - not matter what their job - to be priced out of a market like that. None whatsoever. The average salary could be 15000E and people should be able to afford to buy a house in a market that has adequate supply of same regardless of the average salary.

ionapaul

Is this the 1st real fightback by the bulls in a year? Most had slunk away in defeat, I'm thrilled to see the state of the property market being contested again.

BigglesMcGee

Calina wrote: »

50K is well more than a living wage. Well more than it. If you think it is at best a living wage, then there is a problem. I am not asking you to justify your salary to me, I am asking you to justify your view that 50K is a low salary/wage. You are signally failing to do this. There is a set of statistics around telling you it's above the median income in this country. You haven't addressed one single point raised by gurramok in this respect.

The end result is this. 50K is a decent salary. It's even considered high by the Revenue Commissioners because they tax it at that rate. The key reasons that house prices have gone up in the past 5 or 6 years has little to do with economic fundamentals and everything to do with ease of access to credit. And to keep the kettle boiling the banks had to go further and further and further. We got to mortgage offers of 8 times income, 100% LTVs and mortgage terms of 40 years. In an era of a) falling taxes and b) unprecedentedly low interest rates this is completely ridiculous.

Two things are happening 1) rental supply is rising 2) sales supply is rising.

This suggests we have an excess of supply of housing over housing needs.


There is no good reason for people on average incomes - not matter what their job - to be priced out of a market like that. None whatsoever. The average salary could be 15000E and people should be able to afford to buy a house in a market that has adequate supply of same regardless of the average salary.

Hang on a minute now. You're putting words in my mouth here. I didnt say 50k was a living wage or higher or lower. i simply said that most of the poeple i know are on that or higher.

When i said i want more than a living wage it was in reference to a comment about being happy in life in what you do.

So you are honestly trying to to tell us here that the high tax band is not set too low?

Also, since when could someone ever afford to buy a house on an average wage in a capital city?

Ionapaul.
I consider myself a bear, but i want to be realistic in what i expect to happen. I dont want to turn into the bear version of what the bulls were. ie. Prices and rents falling foreverand the economy headed for complete meltdown no matter what.

Calina

BigglesMcGee wrote: »

Also, since when could someone ever afford to buy a house on an average wage in a capital city?

Actually, it was possible in this country 15 years ago. Additionally, 50K is not average wage, it is nearly 40% above it and the original dust up relates to how 50K is a) a high salary - which you disagree with and consider to be low and b) is not adequate to buy property in the Dublin area.

Secondly, you said you wouldn't be happy with a living wage shortly after you claimed that 50K implied a low level of ambitions. It may be that you didn't intend it but the implication was that 50K was a living wage. If it is not a living wage, tell me where it is relative to a living wage. Higher or lower?

Gegerty

Houses are selling all around. The stats prove that there are less new mortgages being sold and less new houses being built. Existing mortgage owners are buying 2nd hand homes all over the place. Where's that in the news? Oh sorry yeah, good news doesn't sell. Let 1st time buyers sit around living with mumsy and dadsy until they're 41 for all I care or let them continue renting and paying someone elses mortgage instead. For the rest of us we can continue as usual, the only difference being that we will get 5%-20% (whatever the latest is I've lost track) less for our homes and our new homes will cost 5%-20% less, in otherwords no difference whatsoever.

My point being people need to open their eyes to the fact that the so called bubble pop does not affect the majority of people. The only bubble that has burst is the greedy developers profit bubble. Good ridance.

Edit: Just to add to that, has anyone any facts or figures on the subprime market in Ireland? i.e the amount of people who were given mortgages that they could not afford? I know the Irish banks got stung but not because they were doing it, they got stung because they invested in debt in the US. So another thing people need to open their eyes to is that there are not thousands of Irish 1st time buyers who cannot get a mortgage who could have got a mortgage in 2006. It's just not true. Most people who cannot get a mortgage now would not have got one in 2006.

adam.number2

Gegerty wrote: »

Houses are selling all around. The stats prove that there are less new mortgages being sold and less new houses being built. Existing mortgage owners are buying 2nd hand homes all over the place. Where's that in the news? Oh sorry yeah, good news doesn't sell. Let 1st time buyers sit around living with mumsy and dadsy until they're 41 for all I care or let them continue renting and paying someone elses mortgage instead. For the rest of us we can continue as usual, the only difference being that we will get 5%-20% (whatever the latest is I've lost track) less for our homes and our new homes will cost 5%-20% less, in otherwords no difference whatsoever.

My point being people need to open their eyes to the fact that the so called bubble pop does not affect the majority of people. The only bubble that has burst is the greedy developers profit bubble. Good ridance.

That might be a little simplistic although I agree with the general thrust.

The disadvantage for existing home owners who want to trade up or down, is uncertainty. They don't know for sure if they can sell their own home, or indeed exactly how much it is worth. The worst situation for some of them would be to buy their new home and then for the sale of their old home to fall through. There is an understandable fear of being landed with two depreciating assets. (it may not be a realistic fear, but it's an understandable fear at any rate). So while there are some taking out new mortgages, I'm sure, a large proportion of this group are also holding back until market certainty is restored, thus contributing to the ever growing buyer bubble.

Calina

People who are in negative equity - which probably includes any FTB in the last 2 years unless they had a huge deposit - will have some difficulty trading up if the proceeds of the sale of their current property does not clear their mortgage. IT doesn't matter what the new property will cost; it will be harder to get a mortgage for it starting from a negative cash standpoint.

That's why the "okay, you sell yours for 20% less, you buy for 20% less" isn't so straightforward.

gurramok

Gegerty wrote: »

Houses are selling all around. The stats prove that there are less new mortgages being sold and less new houses being built. Existing mortgage owners are buying 2nd hand homes all over the place. Where's that in the news? Oh sorry yeah, good news doesn't sell. Let 1st time buyers sit around living with mumsy and dadsy until they're 41 for all I care or let them continue renting and paying someone elses mortgage instead. For the rest of us we can continue as usual, the only difference being that we will get 5%-20% (whatever the latest is I've lost track) less for our homes and our new homes will cost 5%-20% less, in otherwords no difference whatsoever.

My point being people need to open their eyes to the fact that the so called bubble pop does not affect the majority of people. The only bubble that has burst is the greedy developers profit bubble. Good ridance.

Ah here, another throwing up figures plucked from where?

Now, houses are indeed selling. There are transactions going on, the big difference is, if your quoting IBF stats, is that the volume of transactions have seriously plummeted.
Our economy depends on construction(22% of GNP) and thats why it affects Ireland more than a crash would in the UK for example and it will affect you in the pocket via govt decisions to make up a revenue shortfall

Your comment aimed at FTB's is pure ignorance. You obviously do not understand how the ladder works.

To keep it short, FTB's buy at the bottom of the ladder(usually the cheapest housing).
The people that sell to them trade up to the next rung and so forth.

Now as numbers of FTB's have plummeted, the volume of possible transactions plummets also, its all relative like in a pyramid.

Do you understand or do i have do it in detail?

To the original topic, FTB's by and large are not buying and are renting or living at home, it makes sense until prices bottom out to make it attractive to buy again.

Gegerty

gurramok wrote: »

Your comment aimed at FTB's is pure ignorance. You obviously do not understand how the ladder works.

My comments at FTB was to those sitting on their nest eggs waiting for a better deal.

People who are upgrading need to put their homes on the market for what they are really worth today, and haggle a better deal from the property they are buying. This is the affect on the ladder. People who can't sell are not being realistic with their prices and/or their home is not fit to sell. People will not put up with shoddy DIY etc in a buyers market.

an example:
A house goes up for a totally unrealistic price of 500K for a month or two before the vendors cop on and put the price down to what it should have been in the first place, say 450K. Now this gets added to the statistics as a 50K drop in asking price. Whereas if they had put it up for what it was worth in the first place it doesn't show in the statistics and the statistics would reflect what is really happening.

BigglesMcGee

Calina wrote: »

Actually, it was possible in this country 15 years ago. Additionally, 50K is not average wage, it is nearly 40% above it and the original dust up relates to how 50K is a) a high salary - which you disagree with and consider to be low and b) is not adequate to buy property in the Dublin area.

Secondly, you said you wouldn't be happy with a living wage shortly after you claimed that 50K implied a low level of ambitions. It may be that you didn't intend it but the implication was that 50K was a living wage. If it is not a living wage, tell me where it is relative to a living wage. Higher or lower?

Stop with the putting words in peoples mouths ...please.

Why do you pesist in making stuff about when its all in print in the previous pages. Do i have to go back every time you make up what people say to meet your own ends.

What is it with you? Why do you feel the need to do this?

I never said 50k was average wage. I believe i said it was not a high wage and i never said i considered 50k to be low either.

And i never said that 50k was not adequate to buy property in the Dublin area.

I never said that it you lacked ambition on 50k, i said if you think its high then you should rethink your ambitions. Always aim high, never get happy sitting on your laurels was all i was trying to say.

When i said i would not be happy with a living wage it was in reply to your post that said you were happy in your nappy. What i meant was i always like to increase my prospects (personal viewpoint).

Can you just stop now. Please. Or else quote properly when you are quoting someone.

Gegerty

gurramok wrote: »

Our economy depends on construction(22% of GNP) and thats why it affects Ireland more than a crash would in the UK for example and it will affect you in the pocket via govt decisions to make up a revenue shortfall

Please explain to me how an economy can depend on residential construction? Exactly how is building homes bringing outside money coming into the country?

adam.number2

Gegerty wrote: »

Please explain to me how an economy can depend on residential construction? Exactly how is building homes bringing outside money coming into the country?

Holiday home, expats returning, foreign workers joining our workforce and buying homes, these all result in outside money coming into the country.

SimpleSam06

Gegerty wrote: »

Please explain to me how an economy can depend on residential construction? Exactly how is building homes bringing outside money coming into the country?

Banks don't pull money out of thin air, they get loans from other banks to supply their loans. The money that they borrow from other banks is the money that gets pumped into the economy, and this gets repaid over decades ultimately by people who borrow against future earnings and upon occasion the appreciation of the value of their homes. This is the house of cards the property boom was built upon.

Gegerty

adam.number2 wrote: »

Holiday home, expats returning, foreign workers joining our workforce and buying homes, these all result in outside money coming into the country.

OK yes that brings money into the country, but that is not what our economy is based on.

Calina

Gegerty wrote: »

Please explain to me how an economy can depend on residential construction? Exactly how is building homes bringing outside money coming into the country?

Unfortunately it can't, and that is the problem. As recently as 2006, residential construction accounted for 22% of our GDP and much of it is paid for by debt. A contraction in construction has a detrimental impact on the economy at a time where the cost of housing is feeding into a reduction in competitivity. Much of our exports depend on accounting practice because of our low corp tax and a lot of our employment is FDI related. Our indigenous industries are not labour intensive.

Pa ElGrande

Gegerty wrote: »

Houses are selling all around. The stats prove that there are less new mortgages being sold and less new houses being built. Existing mortgage owners are buying 2nd hand homes all over the place. Where's that in the news? Oh sorry yeah, good news doesn't sell.

Houses are very definitely not selling all around, there is currently a project underway to document the ghost estates across the country that will be with us for many years to come. These people buying second hand houses all over the place are not doing so in Ireland, you can see this from the latest IBF report and the inventory trends reported on Daftwatch.

"Today's figures show that the number of first time buyers getting mortgages is down 61% since its peak at the end of 2005."
Banks issue 25% fewer mortgages

Looking at the data for the first quarter, it looks like the only significant volume of property selling was in and around Dublin, with price drops of 15-25% not being uncommon over 2006 levels to become attractive to buyers.

Gegerty wrote: »

Let 1st time buyers sit around living with mumsy and dadsy until they're 41 for all I care or let them continue renting and paying someone elses mortgage instead. For the rest of us we can continue as usual, the only difference being that we will get 5%-20% (whatever the latest is I've lost track) less for our homes and our new homes will cost 5%-20% less, in otherwords no difference whatsoever.

There is no pressure on first time buyers, and they are well advised to take their time, build up their deposits. Not only will they will be able to afford to buy better quality houses nearer their place of work, also as their employment situation changes the renters have flexibility to move to take advantage of that, not being trapped in a negative equity situation.
Many renters currently enjoy the benefits of being able to rent in desirable areas for less that the mortgage interest paid on the property, were they to buy said property at current asking prices.

Gegerty wrote: »

My point being people need to open their eyes to the fact that the so called bubble pop does not affect the majority of people. The only bubble that has burst is the greedy developers profit bubble. Good riddance.

On the contrary the impact of the bubble burst is being felt worldwide, you are paying more for food and energy as a direct consequence of bailouts to banks who have funnelled these funds into higher earning commodities in order to make up the losses in the housing market. If you have savings in Irish banks, your wealth is at risk not just from declining purchasing power caused by the ECB's monetary inflation policy, but, also the fact that all Irish banks capital is tied up in property and the probability of an Irish bank failure has increased. Funding for the Irish banks has also gotten more expensive and this is being passed on in higher mortgage rates, though I can't complain as much since I am getting a better yield on my money than the people buying residential investment property.
The list grows longer for this bust - construction employment is down, consumer spending is down, government tax revenue is down.

Gegerty wrote: »

Edit: Just to add to that, has anyone any facts or figures on the subprime market in Ireland? i.e the amount of people who were given mortgages that they could not afford? I know the Irish banks got stung but not because they were doing it, they got stung because they invested in debt in the US. So another thing people need to open their eyes to is that there are not thousands of Irish 1st time buyers who cannot get a mortgage who could have got a mortgage in 2006. It's just not true. Most people who cannot get a mortgage now would not have got one in 2006.

ISTC folded, the credit unions and Davies stock brokers got stung, with limited writedowns in Bank of Ireland and Allied Irish banks so far! BoI and PTSB both have subprime operations in the UK. The two leading sub-prime lenders GE money and Start only had about 4,000 customers, and the other subprime lenders had the rug pulled from them in 2007 before they could make any significant impact.

These people who could not get a mortgage in 2006 should bide their time and build up their credit rating and deposit, prices are going to continue downwards for the next 3 years at least (and possibly longer), they are well positioned for the future.