Will the property market pick up within the next 2 years

RuggieBear

lol

i can borrow €494,000 according to that!

Last time i talked to bank i was offered 368,000

ZYX

gurramok wrote: »

Thats for both buyers aged 30 and married. Your been a bit misleading, its for 40 years term and 40% joint income per month.

I was simply using your link. It doesn't ask for length of term so I am hardly misleading. If you use your link and have both people single and 25 you can still get €363,000.

ronbyrne2005

spockety wrote: »

And when that couple has kids and one of them becomes a stay at home parent...?

Exactly, or loses job or becomes ill.

It really is a disgrace that the crooked politicians and their land owning and developer friends were allowed to create such an artifical bubble in land and housing prices here. There is NO reason for Irish land and property to be most expensive in Europe. We have one of the lowest population densities and loads of land lying idle around country. Councillors having the power to rezone land for themselves and their mates made land prices artifically high and those who bought in recent years were paying high prices that ultimately made a few landowners and developers(usually friends of Fianna FAIL) very rich for doing little. Why should a landowner get the full increase in value of his land when it is zoned residential from agricultural when he has done nothing to increase it's value? We the people give the power to rezone land to our councillors so we through our councils should benefit and not landowners who speculated and used influence over politicans to their advantage to screw the vast majority. Young people who have large mortgages have such big mortgages as your elected officials sold you out to their developer/landowner friends and family. When will people in this country wake up and stop letting the crooks screw you!

spockety

ronbyrne2005 wrote: »

Exactly, or loses job or becomes ill.

Well, people seem to be ignoring any of this. While people think it is normal that two full incomes are required in a household in order to buy a home for a family, the property market still has a way to go.

A single income family pulling in the average national wage of about 40k, with a stay at home parent and two kids should be able to be buying a house in a decent working class area.

It was the way before the bubble. It is not the way now. It will be the way again.

gurramok

ZYX wrote: »

I was simply using your link. It doesn't ask for length of term so I am hardly misleading. If you use your link and have both people single and 25 you can still get €363,000.

It still states the term on the results page when you click calculate. It states monthly income and using the affordability part, its 40%.

Try putting same in for 25years(which should be considered normal) on http://www.mortgages.ie/index.cfm/spKey/first_time_buyers.mortgage_payments_calculator.html?mode=basic&go=go&buyer_type=First+Time+Buyer&house_price=420000&product=2&amt=384000&lender=-1&status=Married&comparison=loc&term=25&x=15&y=11
using 4,600 as monthly income and 40% rule, it works out at about 300k mortgage max.
If we include TRS, it brings it up to 330k on the best product which looks like a 1st yr introductory offer.

What can a couple like that get for 300k for a house in the major cities? (hint:it ain't much if they want a decent non-scummy area)

Only apts are lower and they need 20% deposit.

I still think 40% of income is too much especially if they want to have kids, 30% would be safer in these recessionary times.

astrofool

spockety wrote: »

Well, people seem to be ignoring any of this. While people think it is normal that two full incomes are required in a household in order to buy a home for a family, the property market still has a way to go.

A single income family pulling in the average national wage of about 40k, with a stay at home parent and two kids should be able to be buying a house in a decent working class area.

It was the way before the bubble. It is not the way now. It will be the way again.

The economy has been heading towards a situation where both parents are working, unless you are suggesting that the % of women in work will start to decline again, then a singleton, or a couple with one half working, will always be outbid by a couple where both work.

If one parent then decides to become stay at home, it would usually be because the partner's salary has increased to the extent that the other half can stay at home minding the kids.

spockety

astrofool wrote: »

The economy has been heading towards a situation where both parents are working, unless you are suggesting that the % of women in work will start to decline again, then a singleton, or a couple with one half working, will always be outbid by a couple where both work.

If one parent then decides to become stay at home, it would usually be because the partner's salary has increased to the extent that the other half can stay at home minding the kids.

We're heading into a recession, unemployment will at BEST hit 'only' 10%, you can be dang sure that there will be a move back to traditional family units, especially given the ludicrous cost of childcare.

Of course it will be up to banks to account for this societal change in their lending practices (i.e. looking at a 25+ year old couple and factoring in that it's only a matter of time before they have a child and one income is possibly lost)..

By the way, 2008 saw a baby boom.
http://www.independent.ie/national-news/first-quarter-of-2008-delivers-baby-boom-1516124.html

Also, your concept of a singleton or dual income couple "outbidding" a single income family in the race to a home really doesn't factor in the ridiculous oversupply of accomodation for sale in the market.

ZYX

gurramok wrote: »

It still states the term on the results page when you click calculate. It states monthly income and using the affordability part, its 40%.

Try putting same in for 25years(which should be considered normal) on http://www.mortgages.ie/index.cfm/spKey/first_time_buyers.mortgage_payments_calculator.html?mode=basic&go=go&buyer_type=First+Time+Buyer&house_price=420000&product=2&amt=384000&lender=-1&status=Married&comparison=loc&term=25&x=15&y=11
using 4,600 as monthly income and 40% rule, it works out at about 300k mortgage max.
If we include TRS, it brings it up to 330k on the best product which looks like a 1st yr introductory offer.

What can a couple like that get for 300k for a house in the major cities? (hint:it ain't much if they want a decent non-scummy area)

Only apts are lower and they need 20% deposit.

I still think 40% of income is too much especially if they want to have kids, 30% would be safer in these recessionary times.

I think you are getting all confused here Guramock. The point being made earlier was that banks were much tighter with their lending. People were saying the norm was 5X one salary +1X second salary. Or based on affordability of 35%. I simply used your link to show that this was untrue. I am not saying if it is good or bad, but, simply that you can still get a mortgage for a lot of money despite a credit crunch.

gurramok

ZYX wrote: »

I think you are getting all confused here Guramock. The point being made earlier was that banks were much tighter with their lending. People were saying the norm was 5X one salary +1X second salary. Or based on affordability of 35%. I simply used your link to show that this was untrue. I am not saying if it is good or bad, but, simply that you can still get a mortgage for a lot of money despite a credit crunch.

We have had conflicting news over the years whether online calculators can be trusted.(see previous threads where they came up)

So, not neccessarily true what you're saying, you're using the online calculator to back you up.
Now, whether thats true in real life that a couple on 30k each can get a 40yr mortgage of 384k with 40% net earnings forked out on it is the core issue.

Have we real-life examples of the above for late '08 even from the media?

Perhaps Khan can forward his anecdotal examples?

ZYX

gurramok wrote: »

We have had conflicting news over the years whether online calculators can be trusted.(see previous threads where they came up)

So, not neccessarily true what you're saying, you're using the online calculator to back you up.
Now, whether thats true in real life that a couple on 30k each can get a 40yr mortgage of 384k with 40% net earnings forked out on it is the core issue.

Have we real-life examples of the above for late '08 even from the media?

Perhaps Khan can forward his anecdotal examples?

I suppose if you look at the Irish Banking Federations report
http://www.ibf.ie/pdfs/ibf_pwc_mortgage_Q208.pdf
and look at first time buyers you see in 2nd quarter of this year there was 6,106 new FTB mortgages worth €1,526 million or average €250,000. I know you maintain average income is less than €35,000 (although presumably first time buyers earn less than average), that means lending on average was above 5x first income + 1x second. Doesn't show how much was max I know but I suppose it gives some indication.

KhanTheMan

gurramok wrote: »

We have had conflicting news over the years whether online calculators can be trusted.(see previous threads where they came up)

So, not neccessarily true what you're saying, you're using the online calculator to back you up.
Now, whether thats true in real life that a couple on 30k each can get a 40yr mortgage of 384k with 40% net earnings forked out on it is the core issue.

Have we real-life examples of the above for late '08 even from the media?

Perhaps Khan can forward his anecdotal examples?

Just read back through your posts in this thread alone and count the amount of times you've changed your figures. Just how many times are you going to change them and still expect people to think you know what you are talking about. It's hilarious.

But I'm glad people are checking these things out themselves now rather than using a random set of figures from anyof your posts.

ParkRunner

I was recently offered a 100% mortgage, surprised they still offered me one at this stage but they only offer them in very specific circumstances now as far as I know. And it was for 7.25 times my current salary, applying as a single applicant. I wont be taking them up on it anyway because of the current uncertainty regarding how much lower property prices will go.

I would be more interested to hear if anyone has purchased recently and was able to negotiate a substantial reduction in the purchasing price from what was originally being asked?

gurramok

KhanTheMan wrote: »

Just read back through your posts in this thread alone and count the amount of times you've changed your figures. Just how many times are you going to change them and still expect people to think you know what you are talking about. It's hilarious.

But I'm glad people are checking these things out themselves now rather than using a random set of figures from anyof your posts.

What are you on about?

Only once where i corrected myself on a reply to one of ZYX's posts at #57, where the calculation was only pedantic, where else ?

To be fair, ZYX debates maturely unlike your unfounded immature post.

Still waiting for your anecdotal examples you've preached about alot.

ZYX wrote:

I suppose if you look at the Irish Banking Federations report
http://www.ibf.ie/pdfs/ibf_pwc_mortgage_Q208.pdf
and look at first time buyers you see in 2nd quarter of this year there was 6,106 new FTB mortgages worth €1,526 million or average €250,000. I know you maintain average income is less than €35,000 (although presumably first time buyers earn less than average), that means lending on average was above 5x first income + 1x second. Doesn't show how much was max I know but I suppose it gives some indication.

Only thing i could extract from this is that alot of those 6,106 must of been couples purchasing outside the cities OR those buying apts in not so nice areas in the cities OR most earn above average OR god forbid still obtained 100% mortgages back then

Considering average starter prices have not even reached 250,000 in the cities for something decent, these new 40,000 empties we hear about from the IAVI must be mostly apts on above 250,000 prices hence they ain't selling.

astrofool

spockety wrote: »

We're heading into a recession, unemployment will at BEST hit 'only' 10%, you can be dang sure that there will be a move back to traditional family units, especially given the ludicrous cost of childcare.

Of course it will be up to banks to account for this societal change in their lending practices (i.e. looking at a 25+ year old couple and factoring in that it's only a matter of time before they have a child and one income is possibly lost)..

By the way, 2008 saw a baby boom.
http://www.independent.ie/national-news/first-quarter-of-2008-delivers-baby-boom-1516124.html

Also, your concept of a singleton or dual income couple "outbidding" a single income family in the race to a home really doesn't factor in the ridiculous oversupply of accomodation for sale in the market.

As long as wages are more than the cost of childcare, then people will work, childcare is expensive, but will also come down, or at least stabilise during a recession (less demand). In the case of a married professional couple, unless money is not an issue, then it would be silly for one partner to forego their earning potential, which they spent at least 4 years studying to qualify for, and would generally have quite an upward career ladder. Do you really expect a female GP, lawyer, engineer to give up work to raise children?

Even now, unemployment has mainly been hitting the construction industry, which is male oriented.

The % of women working will not drop, and will increase, therefore more couples with dual incomes, and therefore more money available to outbid other buyers for a family home. There's also a safety valve for the bank, chances of both being laid off < chances of a single earner being laid off.

BigglesMcGee

KhanTheMan wrote: »

Just read back through your posts in this thread alone and count the amount of times you've changed your figures. Just how many times are you going to change them and still expect people to think you know what you are talking about. It's hilarious.

But I'm glad people are checking these things out themselves now rather than using a random set of figures from anyof your posts.

Very true. I didnt notice this til i read his posts here again. But give the man a break. He's just passionate about his side of the fence, but i agree that one cant pretend that their figures are accurate if they keep modifying their numbers when they are challenged on them and then pretend they didnt.

spockety

astrofool wrote: »

As long as wages are more than the cost of childcare, then people will work, childcare is expensive, but will also come down, or at least stabilise during a recession (less demand). In the case of a married professional couple, unless money is not an issue, then it would be silly for one partner to forego their earning potential, which they spent at least 4 years studying to qualify for, and would generally have quite an upward career ladder. Do you really expect a female GP, lawyer, engineer to give up work to raise children?

Even now, unemployment has mainly been hitting the construction industry, which is male oriented.

The % of women working will not drop, and will increase, therefore more couples with dual incomes, and therefore more money available to outbid other buyers for a family home. There's also a safety valve for the bank, chances of both being laid off < chances of a single earner being laid off.

I don't expect lawyers, GP's, or engineers to give up their jobs, no. I expect that people in those professions will continue to be able to afford to live in the most salubrious areas of Dublin.

You're missing my point. I'm saying there is currently NO space in the market for a single income family on just above the average wage to buy a house in a decent working class area. I'm not talking about doctor's and lawyers, or anybody else with high qualifications or professions. I'd say those people are in a minority. The housing market is ill as far as I'm concerned until the bottom end really bottoms out, and the areas just above that become affordable to an average single income family.

Also, I have to say I think you are being pretty dismissive of the role that stay at home parents play in society (whether they be male, or female, I never specified but you seem to)....

gurramok

BigglesMcGee wrote: »

Very true. I didnt notice this til i read his posts here again. But give the man a break. He's just passionate about his side of the fence, but i agree that one cant pretend that their figures are accurate if they keep modifying their numbers when they are challenged on them and then pretend they didnt.

Welcome back Biggles.:)

I still do not see what Khan was on about modifying figures with his inaccurate rant.

One is pretentious, who?

Astrofool wrote:

The % of women working will not drop, and will increase,

What do you base this on? Are you basing it simply on percentages with less males at work out of a lower amount of people at work or are you saying the numbers of women at work will actually rise?

Women work in Services like retail and Manufacturing. I mention these sectors as they are contracting at a record pace.(this was mentioned in the RTE business section during the week)

It's not only men who are suffering, women are suffering too on the jobs front, it's just not by as much through weight of numbers.

Something hasn't been mentioned here. The national workforce is declining along with national income and is forecast to be to at least till 2010. That means less buyers available for precious overpriced houses.
To answer the OP, NO the property market will not pick up within the next 2 years even with rock bottom interest rates.

SimpleSam06

astrofool wrote: »

There's also a safety valve for the bank, chances of both being laid off < chances of a single earner being laid off.

Chances of one partner being able to pay the full mortgage < chances of two partners being able to do it, possibly leaving two people facing bankruptcy.

johnnyskeleton

I would define property market recovering in a very literal sense i.e. that houses start to sell again in reasonable numbers irrespective of price. As many have said before me, property prices are unlikely to return to what they were in 2006 during the short to medium term.

As for when the property market will recover by that definition, the sole issue is price. If house prices drop dramatically, then the market should recover fairly quickly (in fact, if prices dropped to realistic prices tomorrow, the market would recover on monday). The main (arguably only) reason why houses are not selling in any great numbers at the moment is that the prices being asked are simply too high, and economic uncertainty means that most people are risk averse.

During boom times, when property prices rose by double digits, for most people it made sense to buy property irrespective of price, because they believed that in a year's time it would be worth at least 10% more. Therefore, they not only got to live for free, but also made a hefty profit. There were some people who bought houses never intending to live in them or rent them out, but just in the expectation of capital appreciation. So in good times, people will pay over the odds for property.

During normal times, when prices rise broadly in line with inflation, people will only buy property if it makes sense having regard to the comparative cost of renting, the monthly repayment and the ability to recover any losses if sold in the short term. Therefore, in normal times, people will pay a sustainable price for property.

During uncertain times, people will look at the same considerations as they would in normal times, but with one major difference - they will want to make sure that they do not make a huge loss on the property. Therefore, in uncertain times, people will pay less than they would in normal times, to compensate for this risk.

If I could get a good 2 bed apartment in town for under €200k I'd snap it up, but since the cheapest 2 beds in town are €295k (and many are on sale for €500-600k, there is a long way to go) prices are simply too high.

johnnyskeleton

astrofool wrote: »

The economy has been heading towards a situation where both parents are working, unless you are suggesting that the % of women in work will start to decline again, then a singleton, or a couple with one half working, will always be outbid by a couple where both work.

If one parent then decides to become stay at home, it would usually be because the partner's salary has increased to the extent that the other half can stay at home minding the kids.

Having a kid has one of two consequences for a working couple (other than those who work from home or have free child minding facilities in work):

1) One of them (either the woman or the man) must either quite their job or reduce hours so that they have time to look after the kids, or
2) they must pay for a creche/childminder.

So even if both parents keep working, they will still have the increased cost of child minding (nevermind the other costs associated with rearing children) and that is why assuming that both people will retain their full salary is a bad idea.

The big problems with mortgage calculations are that they have been based on trying to get as much money together as possible, based on the assumption that house prices will always go up. Now that that is no longer the case (at least in the short to medium term), people must look at 25/30/35/40 year mortgages, not as a way of reducing the monthly installment, but as a very real agreement that they will be in debt for the next 25/30/35/40 years. The idea that someone would take out a 40 year mortgage on a property that they will sell for a profit in 5 years made sense at the time, but the idea that someone would get into debt for 40 years on what is called a "starter home" (i.e. a pokey apartment or house in commuter belt) is lunacy.

ravendude

I think it will be a number of years before house prices rise again.
There is one HUGE reason, and it is down to a seachange in how the Irish now perceive property in general.

There was up to very recently, an institutional perception that money put into property was "as safe as houses", that you couldn't go too far wrong with property and buying your own home.

That perception has been shattered irrevocably. Boy has it been shattered...

johnnyskeleton wrote: »

Having a kid has one of two consequences for a working couple (other than those who work from home or have free child minding facilities in work):

1) One of them (either the woman or the man) must either quite their job or reduce hours so that they have time to look after the kids, or
2) they must pay for a creche/childminder.

So even if both parents keep working, they will still have the increased cost of child minding (nevermind the other costs associated with rearing children) and that is why assuming that both people will retain their full salary is a bad idea.

The big problems with mortgage calculations are that they have been based on trying to get as much money together as possible, based on the assumption that house prices will always go up. Now that that is no longer the case (at least in the short to medium term), people must look at 25/30/35/40 year mortgages, not as a way of reducing the monthly installment, but as a very real agreement that they will be in debt for the next 25/30/35/40 years. The idea that someone would take out a 40 year mortgage on a property that they will sell for a profit in 5 years made sense at the time, but the idea that someone would get into debt for 40 years on what is called a "starter home" (i.e. a pokey apartment or house in commuter belt) is lunacy.

Firetrap

Yep. I also think that the bubble was driven to a large extent by panic. That if you didn't buy something somewhere as soon as possible, you would have missed the boat. I'm sure I'm not the only person who's had well-meaning relatives asking me when I was going to buy and that I'd better get my skates on. Oddly, there's not a peep out of them now

Property was seen as a sure thing. That it didn't matter what you paid - there would always be someone else ready to come along and buy your house/apartment for more than what you paid for it. The Greater Fool Theory I think it's called.