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Property investors lose out as lenders fail to pass on ECB rate cuts
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11-11-2008 10:51am#1Join Date:Posts: 30620
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A NUMBER of lenders have decided not to pass on interest rate cuts to their buy-to-let customers in a move that has been described as unfair to property investors.
Building societies Irish Nationwide and Haven/EBS have decided not to pass on recent cuts in the European Central Bank (ECB) rates to property investor customers who have standard variable rate mortgages.
A spokeswoman for EBS confirmed yesterday that the October cut in ECB rates was not passed on to buy-to-let investors. The society is reviewing whether or not to pass on last week's rate cut to investors with standard variable rate mortgages.
Asked why the rate reductions were not being passed on, the spokeswoman said there were "different risks associated with investor mortgages" compared with residential homeloans.
A spokesman for Irish Nationwide confirmed that the October ECB rate cut had not been passed on to investors, while no decision had been made yet on whether to pass on last week's reduction.
One Irish Nationwide investor customer, who has three mortgages with the building society, has hit out at the failure to pass on the cuts. The customer, who did not want to be named, said he was told by Irish Nationwide last week's ECB rate cut would be passed on to buy-to-let mortgage holders but the October rate cut would not.
Mortgage brokers said yesterday the building society's standard variable mortgage rate for investors is 6.49pc, one of the highest for property investor mortgages.
Pressure
Karl Deeter, of Irish Mortgage Brokers, said banks and building societies were failing to pass on rate cuts to investors as they were able to get away with it. "Basically, the banks and building societies won't give investors any breaks because there is no political pressure to do so."
He accused lenders of making fat profits on buy-to-let mortgages.
"The margins on a loan at 6.35pc are an impressive 3.1pc over the ECB. That's almost a 100pc mark-up, even taking interbank rates into consideration (4.4pc)."
He added that most lenders will only do investment properties at loan to value of 50pc or less which meant that most investors were unable to switch to another lender. "Switching in the investor market is all but impossible in the current environment, and that's not credit crunch alone. That's due to bank lending policy becoming so restrictive," he added.0
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I can't say I'm not happy about this. Buy to let purchasers are one of the major causes of the ridiculous house pricing issues we've had over the last few years.
I'm not feeling any sympathy, because lets face it, even if the rate cuts were passed on none of these people would reduce the rents they are charging their tenants.
So ultimately they can cry all they want about "banks maximising their profits" because that's all these investors are looking to do with the cuts anyway.0 -
actually my parents have two buy-to-let properties, which they have been renting out at below the mortgage repayments since they bought them (like a lot of landlords, considering the banks wasted no time in putting the rates UP each time the ECB did). They bought the houses as a pension insurance. now that their actual pension has all but been wiped out, and the value of the properties is below what they paid for them, and they're still paying out more on the mortgage than rent, why the hell shouldn't the rates be passed on? They pay their taxes that have guarenteed these banks, and they have never defaulted on a payment. They are not "crying" over this, but it is highly unfair, unethical, uncompetitive and is contradictory to the reason for the ECB cuts, putting money back into the peoples pockets, rather than the fat cat banks.0
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I imagine BTL mortgages are one of the most risky type of mortgage for a bank (and indeed the investors) and if they're expecting a high default rate on the mortgages they need to keep the rate fairly high so they have decent cashflow.
Not saying it's good for prople like amos' parents, but it definitely makes sense from the bank's point of view. If people aren't on tracker mortgages, there should be no automatic expectation of the rate lowering. The bank didn't have the lower rate when they coughed up the cash for the mortgage, so why should they drop it now?*
* - I'm not actually sure if this is how it works, do the banks finance with their upstream lenders on a tracker rate?0 -
Not sure there's any evidence for your assumption that none will reduce rents. A rate cut would give many landlords who bought recently more leeway in reducing their rent, at least giving some renters an even better shot at haggling over rent. Some landlords might refuse the pass on the cut. But those who recognise the dire state of the rental market will take the opportunity to undercut them.I'm not feeling any sympathy, because lets face it, even if the rate cuts were passed on none of these people would reduce the rents they are charging their tenants.
What irritates me more is that banks are slow to pass on ECB rate cuts on mortgages but incredible efficient when it comes to slashing interest rates on savings accounts. Remember it's your patriotic duty to spend money. Saving is just plain irresponsible :rolleyes:0 -
BTL investors had it easy for ages so no sympathy. the had favourable tax treatment of interest relief, PRSAs, section 23, section 50, low property taxes, little tenant rights etc.0
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ronbyrne2005 wrote: »BTL investors had it easy for ages so no sympathy. the had favourable tax treatment of interest relief, PRSAs, section 23, section 50, low property taxes, little tenant rights etc.
+1. Property investors were a key contributer to the astronomical rising house prices. I was only able to purchase my house once the bacon report was implemented ten years ago to allow FTBs' a chance to buy.0 -
actually my parents have two buy-to-let properties, which they have been renting out at below the mortgage repayments since they bought them (like a lot of landlords, considering the banks wasted no time in putting the rates UP each time the ECB did). They bought the houses as a pension insurance. now that their actual pension has all but been wiped out, and the value of the properties is below what they paid for them, and they're still paying out more on the mortgage than rent, why the hell shouldn't the rates be passed on? .
From the banks perspective you parents have 3 times a mortgage debt risk (assuming they have their own house mortgaged also) than a single residential mortgage owner has.0 -
actually my parents have two buy-to-let properties, which they have been renting out at below the mortgage repayments since they bought them (like a lot of landlords, considering the banks wasted no time in putting the rates UP each time the ECB did). They bought the houses as a pension insurance. now that their actual pension has all but been wiped out, and the value of the properties is below what they paid for them, and they're still paying out more on the mortgage than rent, why the hell shouldn't the rates be passed on? They pay their taxes that have guarenteed these banks, and they have never defaulted on a payment. They are not "crying" over this, but it is highly unfair, unethical, uncompetitive and is contradictory to the reason for the ECB cuts, putting money back into the peoples pockets, rather than the fat cat banks.
While I have sympathy for their position, what concerns me is that they went into this already subsidising rent. Personally speaking I do not understand why it was considered good business to subsidise rent (guaranteed cashflow out) in the hope of capital appreciation (not guaranteed cash in).
I realise they are in a difficult position now but from the point of view of pension planning this was not wise practice. Interest rates are way on the low side of average so the comparative costs were likely to go up unless inflation went way out of control. As someone who has more savings than debt it'll be a cold day in hell before I think that's a good thing. Most people don't like inflation on their day to day living costs.
I understand that banks will assess default risks differently. BTL is probably at a higher risk of default in general than people who are trying to hold onto their homes. In your parents position, dependent on how far from retirement they are, and what the current nominal loss on the properties are, I would be looking very carefully not at the interest rate, but the overall cost of the properties.0 -
I dont agree that BTL owners pushed up the house prices - for two reasons
1. due to the increase in population over the last ten years, both from irish people returning who had previously emigrated and from immgrants (who at this stage last year accounted for 10 % of the population, thats approx 400,000), there was a massive surge in demand for houses. most immgrants prefer to rent, as they may return home, so BTL owners were merely providing a service to these people.
2. BTL owners do not themselves drive demand for the above reason nor do they set the prices - they have to pay the high prices just like you or me, it is the developers who made the massive markups on the value of houses. The demand and therefore the prices would still be high if the immigrants were purchasing the houses and there was no letting at all.
On another point, referring to it being foolish to speculatively purchase a house hoping for a capital gain, people who purchased BTL houses in the past three years were not being foolish, firstly because of the upward trend in house values for the past 20-30 years (although accelerated in the last ten) gave a reasonable basis for the assumption that they would continue that way for the forseeable future, and also because it is deemed a safer speculative option than other investments options, for example buying shares, a lot of which are only worth about 10 % of the value they were at last year.most economists also agree that within 5 years the houses prices will be back to the original upward trend, and what we are seeing at the moment is only a temporary adjustment in the market.
Lastly, there are strict regulations in place for landlords to keep safe living conditions in their houses, and, unless the house in question was built 15 + years ago, I don't see many houses around that are structurally unsound, and if they are, this is the fault of the developer surely, not the landlord?0 -
ronbyrne2005 wrote: »BTL investors had it easy for ages so no sympathy. the had favourable tax treatment of interest relief, PRSAs, section 23, section 50, low property taxes, little tenant rights etc.
Oh and on the above "favourable tax treament" - these are limited to very few landlords and under very strict conditions. most, including my parents, received no tax relief, definately no interest relief, which I thought and I could be wrong here, only applies to first time buyers? as far as low property taxes, they've to pay the same rate of stamp duty as everyone else but they also have to pay a capital gains tax on any profit they make on the sale, unlike owner-occupiers. section 50 relief is only for colleges and the small areas surrounding the college. section 23 is only selected properties in rundown areas the government wanted to develop. so again, the vast majority of landlords cannot avail of these reliefs.0 -
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Is the mortgage interest considered an expense when calculating the tax owed on the rental income?0
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I dont agree that BTL owners pushed up the house prices - for two reasons
1. due to the increase in population over the last ten years, both from irish people returning who had previously emigrated and from immgrants (who at this stage last year accounted for 10 % of the population, thats approx 400,000), there was a massive surge in demand for houses. most immgrants prefer to rent, as they may return home, so BTL owners were merely providing a service to these people.
2. BTL owners do not themselves drive demand for the above reason nor do they set the prices - they have to pay the high prices just like you or me, it is the developers who made the massive markups on the value of houses. The demand and therefore the prices would still be high if the immigrants were purchasing the houses and there was no letting at all.
On another point, referring to it being foolish to speculatively purchase a house hoping for a capital gain, people who purchased BTL houses in the past three years were not being foolish, firstly because of the upward trend in house values for the past 20-30 years (although accelerated in the last ten) gave a reasonable basis for the assumption that they would continue that way for the forseeable future, and also because it is deemed a safer speculative option than other investments options, for example buying shares, a lot of which are only worth about 10 % of the value they were at last year.most economists also agree that within 5 years the houses prices will be back to the original upward trend, and what we are seeing at the moment is only a temporary adjustment in the market.
Lastly, there are strict regulations in place for landlords to keep safe living conditions in their houses, and, unless the house in question was built 15 + years ago, I don't see many houses around that are structurally unsound, and if they are, this is the fault of the developer surely, not the landlord?
In 2006, 40% of new houses went to investors so it is disingenuous to say that BTL did not push up demand. In the last year of the boom, they accounted for 40% of new property purchases to the detriment of FTBs.
House prices in Ireland peaked in 2006, and they have only been going south in the meantime. Additionally, average houseprices reached a multiple of 10 times average salaries. This was not sustainable so anyone who was buying in the past 3 years ago should have done more research. It is not wise to buy investment property at the top of the market and the top of the market had to be close at that stage. The most reasonable assumption in the last 3 years was that property prices rises were unsustainable, not that the rises would continue.0 -
In 2006, 40% of new houses went to investors so it is disingenuous to say that BTL did not push up demand. In the last year of the boom, they accounted for 40% of new property purchases to the detriment of FTBs.
House prices in Ireland peaked in 2006, and they have only been going south in the meantime. Additionally, average houseprices reached a multiple of 10 times average salaries. This was not sustainable so anyone who was buying in the past 3 years ago should have done more research. It is not wise to buy investment property at the top of the market and the top of the market had to be close at that stage. The most reasonable assumption in the last 3 years was that property prices rises were unsustainable, not that the rises would continue.
Again, BTL buyers would not have bought 40% of the houses on sale if there had not ALREADY been a demand for the houses in question - that would be unsustainable. And yes, the markets peaked, but houses are not short term assets such as cars etc, they are long term fixed assets with useful lives of potentially 25-50 years. It is "disingenuous" to infer that the prices will never again raise back to the original cost price, or that they will not indeed yield a future profit. bear in mind a 3 bed semi detached in Meath cost only 35k 15 years ago. The same house is now worth ten times that. There will always be an impact of inflation, even if it isn't to the same extent.
As for deductable interest on the taxable rental income, yes it is treated as an expense, I'm sorry I thought the previous blogger was talking of TRS. The mortgage itself is not deductable, so if your making a loss on the rental V mortgage payments, you still pay tax on the full income, less any allowable expenses.0 -
Most landlords do get mortgage interest relief written off. This is one reason banks were throwing mortgages at this segment to the detriment of house-to-live-in buyers hence the latter could not compete whilst BTL's drove up the prices.
Zero sympathy. Its an investment with which parts can be written off against tax(mortgage interest relief, that new furniture, fridge etc) and as we know investments can go up as well as down.amos13 wrote:Again, BTL buyers would not have bought 40% of the houses on sale if there had not ALREADY been a demand for the houses in question - that would be unsustainable. And yes, the markets peaked, but houses are not short term assets such as cars etc, they are long term fixed assets with useful lives of potentially 25-50 years. It is "disingenuous" to infer that the prices will never again raise back to the original cost price, or that they will not indeed yield a future profit. bear in mind a 3 bed semi detached in Meath cost only 35k 15 years ago. The same house is now worth ten times that. There will always be an impact of inflation, even if it isn't to the same extent.
Hence lots of BTL's are subsidising their investment for alot of those prospective 25-50yrs to get a return. 2006 buyers are involved in a heavily loss making venture which is raping them year on year financially.
Wait until the interest goes down substantially after 5-10yrs, it just gets worse financially for them as that tax write off of mortgage interest will dwindle big time.0 -
Most landlords do get mortgage interest relief written off. This is one reason banks were throwing mortgages at this segment to the detriment of house-to-live-in buyers hence the latter could not compete whilst BTL's drove up the prices.
Zero sympathy. Its an investment with which parts can be written off against tax(mortgage interest relief, that new furniture, fridge etc) and as we know investments can go up as well as down.
Hence lots of BTL's are subsidising their investment for alot of those prospective 25-50yrs to get a return. 2006 buyers are involved in a heavily loss making venture which is raping them year on year financially.
Wait until the interest goes down substantially after 5-10yrs, it just gets worse financially for them as that tax write off of mortgage interest will dwindle big time.
Not true. Your not taking account of the time value of money and assuming that rent rates will stay the same over the 25-50 year period. Rent, just like everything else affected by inflation, will invariably go up over time and landlords will price to the market rate for their respective localities. mortgages, however, will only vary by the interest rates (capital amounts will only reduce, reducing the interest owable on them) which will fluctuate but will average out at 5-6%, unless things go extremely pearshaped!
But asides from this, can someone explain to me in no uncertain terms why there is so much negativity towards landlords, simply for making an investment? (I'm not going to get into the "they pushed the prices up" argument again, anyone who has any idea of the concept of economics and the supply/demand model will know this isn't true, or else refer to the above comments)
Landlords are simply providing a service. people who can't afford / don't want to buy, still need places to live. If there were no landlords, where would all the students in dublin, cork, sligo etc go? where would all the immigrants live? are these people expected to live on the streets? most landlords are not overcharging the tenants - they are barely covering the mortgages, so its (rarely) for greed. Its an investment, similar to any other, speculative and risky like any other, and yet there seems to be some sort of unwarranted loathing towards them.
and if interest rates were actualy passed on rather than being held back by the banks, then possibly landlords would pass this on in rents. At the moment, they have no choice in the matter at all.0 -
1) You are not taking account of inflation when you are talking about property rises. Historically, property tracks inflation on average. For the past 10 years, however, property in Ireland far outstripped inflation and inflation here was comparatively high. To turn a profit on a property, you will have to add original price plus interest plus running costs together and take account of inflation. You are not doing this and nor are you recognising that there will be a return to mean which means quite a lot of property deflation over the coming years.
2) there is negativity towards landlords because a number of tenants in this country - myself included - have experience of landlords who are extremely hot on their rights and not so hot at all on their obligations under a) the leases they insisted on signing or b) prevailing legislation. In Ireland, landlords can be a right nightmare to deal with between refusing to return deposits and issuing invalid notice and above all else, visiting properties without prior arrangement or agreement. The service many landlords in Ireland supply is short of what is normal in other civilised countries in other words.
3) BTL bought 40% of new builds. Not all of them ever even got to be rented - the census revealed a large level of unoccupied property nationally. They bought them because of the demand for capital appreciation and because flipping houses allowed them to make profits. At the same time, rents were static of falling and this at a time of unprecedented immigration into the country. In short, rental supply with the exception of a short period around Jan 2007 has generally outstripped rental demand and the population is now falling, not rising.0 -
No sympathy whatsoever.0
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1) You are not taking account of inflation when you are talking about property rises. Historically, property tracks inflation on average. For the past 10 years, however, property in Ireland far outstripped inflation and inflation here was comparatively high. To turn a profit on a property, you will have to add original price plus interest plus running costs together and take account of inflation. You are not doing this and nor are you recognising that there will be a return to mean which means quite a lot of property deflation over the coming years.
2) there is negativity towards landlords because a number of tenants in this country - myself included - have experience of landlords who are extremely hot on their rights and not so hot at all on their obligations under a) the leases they insisted on signing or b) prevailing legislation. In Ireland, landlords can be a right nightmare to deal with between refusing to return deposits and issuing invalid notice and above all else, visiting properties without prior arrangement or agreement. The service many landlords in Ireland supply is short of what is normal in other civilised countries in other words.
3) BTL bought 40% of new builds. Not all of them ever even got to be rented - the census revealed a large level of unoccupied property nationally. They bought them because of the demand for capital appreciation and because flipping houses allowed them to make profits. At the same time, rents were static of falling and this at a time of unprecedented immigration into the country. In short, rental supply with the exception of a short period around Jan 2007 has generally outstripped rental demand and the population is now falling, not rising.
1) I have taken account of inflation. If the proprty prices reflect inflation for the next ten years, then trust me, 2-5% appreciation on houses currently of 300k value will more than cover expenses. so long as rent is close to repayments, even if landlords are making a slight loss, this looks after interest
2) I've lived in three rented accomodations myself. two landlords were great and 1 was a bas**d. don't tar them all. deposits are not returned if you have caused damage to the property or have spoiled items such as carpets. This is all in your contract. tenants don't exactly look after rented houses the way they'd look after their own, especially students. They do have to give notice to visit for an inspection. landlords are entitled to call to your door whenever they want, there isn't some sort of restraining order put on them!!! but you have to allow them into your house. if he turns up and you let him in, thats your fault.
3) supply only outstripped demand in the last year, since houseprices started falling, and before it was realised there would be a housing surplus. If thousands of houses had been left empty like that over the past ten years developers would have gone out of business. they're only starting to go out of business the last few months. its directly related.0 -
1) I have taken account of inflation. If the proprty prices reflect inflation for the next ten years, then trust me, 2-5% appreciation on houses currently of 300k value will more than cover expenses. so long as rent is close to repayments, even if landlords are making a slight loss, this looks after interest
But you haven't taken account of deflation which we are currently enjoying. Depending on whose set of figures you believe, property is down anywhere between 20 and 30% since the top of the market in 2006, nominally. Those losses have to be made up first.2) I've lived in three rented accomodations myself. two landlords were great and 1 was a bas**d. don't tar them all. deposits are not returned if you have caused damage to the property or have spoiled items such as carpets. This is all in your contract. tenants don't exactly look after rented houses the way they'd look after their own, especially students. They do have to give notice to visit for an inspection. landlords are entitled to call to your door whenever they want, there isn't some sort of restraining order put on them!!! but you have to allow them into your house. if he turns up and you let him in, thats your fault.
If I am not there, it's hard to stop him, sorry. I've lived in a lot of accommodation here in teh last 10 years. Some are good but they are unusual. The PRTB is full of judgments against landlords and this forum is full of tenants complaining about problem landlords. I've also lived in rental accommodation in several other European countries where the rental market is made up of mature participants. Your comments about tenants not looking after rented houses are in my experience incorrect.3) supply only outstripped demand in the last year, since houseprices started falling, and before it was realised there would be a housing surplus. If thousands of houses had been left empty like that over the past ten years developers would have gone out of business. they're only starting to go out of business the last few months. its directly related.
Rents fell nominally from 2001 to 2007. This does not imply a shortage of supply but a shortage of demand. Developers didn't go bust because investors were buying them and they were the ones who had problems/decisions not to rent. Once the property is sold, the developer has no interest in its function. Do you not understand this?0 -
But you haven't taken account of deflation which we are currently enjoying. Depending on whose set of figures you believe, property is down anywhere between 20 and 30% since the top of the market in 2006, nominally. Those losses have to be made up first.
If I am not there, it's hard to stop him, sorry. I've lived in a lot of accommodation here in teh last 10 years. Some are good but they are unusual. The PRTB is full of judgments against landlords and this forum is full of tenants complaining about problem landlords. I've also lived in rental accommodation in several other European countries where the rental market is made up of mature participants. Your comments about tenants not looking after rented houses are in my experience incorrect.
Rents fell nominally from 2001 to 2007. This does not imply a shortage of supply but a shortage of demand. Developers didn't go bust because investors were buying them and they were the ones who had problems/decisions not to rent. Once the property is sold, the developer has no interest in its function. Do you not understand this?
Of course the losses have to be made up first. You don't think that over the useful life of the house, the loss won't be recovered? the losses will be recovered in the much shorter term. this may not begin to happen until the recession is over but the recession is not going to last 25+ years! And we do not have deflation, we have a decrease in inflation, they are two different things.
I've never heard of a landlord entering the house when the tenant isn't there, so you were very unlucky. its never happened to me, any f my friends, and the landlords I know wouldn't do it. you could actually have reported him for that. if you didn't, then you didn't use your tenant rights. And by your experience, do you mean YOU have looked after the house? because you obviously don't have tenants so your experience would be limited. My parents have had 9 different sets of tenants in their two properties. They have had to replace a large item of furniture or other necessity each time they moved out. thats 100% of the time. And I have to admit I am also guilty of it. as are just about all my friends who have rented and brought parties of people back most saturday nights.
Again, your talking about rent falling nominally, ie, in relation to inflation. possibly true, I don't know where them figures come from. but a drop in rental demand would mean a higher default rate over the period and related to that wuld be a drop in BTL demand, which would affect developers. That did not happen, until recently. Do YOU not understand THIS? And the mere notion that there was a reduction in demand considering the massive increase in population is, to be honest, laughable. where did all the new people live? are they on the streets or something?0 -
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Landlords are not entitled to keep the full deposit unless damages equal or exceed the deposit. For lesser amounts they can take the cost of the damages from the deposit, and must return the rest.deposits are not returned if you have caused damage to the property or have spoiled items such as carpets.
I recall I went to look at a place about two years ago, and the clown asked me if I had damaged the skirting board while I was inspecting the rental property! Another yahoo wanted me to act as a porter for another tenant moving into an apartment complex, again while I was taking a first look at a rental accommodation. Unbelievable.0 -
TwoShedsJackson wrote: »No sympathy whatsoever.
Exactly.
Why have sympathy for somebody who bought a house and expected somebody to pay the mortgage for them.0 -
Of course the losses have to be made up first. You don't think that over the useful life of the house, the loss won't be recovered? the losses will be recovered in the much shorter term. this may not begin to happen until the recession is over but the recession is not going to last 25+ years! And we do not have deflation, we have a decrease in inflation, they are two different things.
We have property price deflation. Do you understand what this means? It means that property prices are falling. I'll also add that in Japan, property prices did not recover in the short term and in the UK, many areas took 10 years to recover nominal prices after their last crash. So frankly, I actually don't know if the loss will be recovered in the much shorter term but I have serious doubts. The key isssue is recovery over the term of the mortgage, by the way, not useful life of the house. The house might be useful for 200 years but show me anyone who lives that long.
As for what will happen the recession, no one is absolutely sure but I as sure as hell would not want to be borrowing 8 to 10 times my salary to buy property and I can't see the banks beign as profligate for a long time as they were up to 2006.I've never heard of a landlord entering the house when the tenant isn't there, so you were very unlucky. its never happened to me, any f my friends, and the landlords I know wouldn't do it. you could actually have reported him for that. if you didn't, then you didn't use your tenant rights. And by your experience, do you mean YOU have looked after the house? because you obviously don't have tenants so your experience would be limited. My parents have had 9 different sets of tenants in their two properties. They have had to replace a large item of furniture or other necessity each time they moved out. thats 100% of the time. And I have to admit I am also guilty of it. as are just about all my friends who have rented and brought parties of people back most saturday nights.
Then your parents were unlucky. I have never caused damage in a house I have lived in, and I have always had my deposit returned. However I know a lot of people who have had serious issues on this front and my own problems relate to notice and visiting rights.Again, your talking about rent falling nominally, ie, in relation to inflation. possibly true, I don't know where them figures come from. but a drop in rental demand would mean a higher default rate over the period and related to that wuld be a drop in BTL demand, which would affect developers. That did not happen, until recently. Do YOU not understand THIS? And the mere notion that there was a reduction in demand considering the massive increase in population is, to be honest, laughable. where did all the new people live? are they on the streets or something?
The figures come from Daft, as it happens. I think you haven't got a single clue what you are talking about. Rental supply outstripped rental demand except for a brief period around Jan 2007 when supply moved from the rental to the sales market.
The issue is that supply ballooned at the time, far faster than demand ballooned, even during a period of record immigration. Hence rents remained static or falling even while property sales prices went into the stratosphere. I don't think you understand this.0 -
We have property price deflation. Do you understand what this means? It means that property prices are falling. I'll also add that in Japan, property prices did not recover in the short term and in the UK, many areas took 10 years to recover nominal prices after their last crash. So frankly, I actually don't know if the loss will be recovered in the much shorter term but I have serious doubts. The key isssue is recovery over the term of the mortgage, by the way, not useful life of the house. The house might be useful for 200 years but show me anyone who lives that long.
As for what will happen the recession, no one is absolutely sure but I as sure as hell would not want to be borrowing 8 to 10 times my salary to buy property and I can't see the banks beign as profligate for a long time as they were up to 2006.
Then your parents were unlucky. I have never caused damage in a house I have lived in, and I have always had my deposit returned. However I know a lot of people who have had serious issues on this front and my own problems relate to notice and visiting rights.
The figures come from Daft, as it happens. I think you haven't got a single clue what you are talking about. Rental supply outstripped rental demand except for a brief period around Jan 2007 when supply moved from the rental to the sales market.
The issue is that supply ballooned at the time, far faster than demand ballooned, even during a period of record immigration. Hence rents remained static or falling even while property sales prices went into the stratosphere. I don't think you understand this.
To be honest, I am not going to deal with you any more. and its not because of your views or because I don't know what I'm talking about, but rather because you can't seem to have a topical debate without consistently being obnoxious and inferring I'm stupid. I happen to know what I'm talking about, being in the property market, the occupation I am in, and the people I am surrounded by. And my capacity for understanding goes beyond what I read in the papers, unlike yourself. so good luck.0 -
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Regards,
SMcCarrick0 -
To be honest, I am not going to deal with you any more. and its not because of your views or because I don't know what I'm talking about, but rather because you can't seem to have a topical debate without consistently being obnoxious and inferring I'm stupid. I happen to know what I'm talking about, being in the property market, the occupation I am in, and the people I am surrounded by. And my capacity for understanding goes beyond what I read in the papers, unlike yourself. so good luck.
Ha Ha, take your ball and leave the pitch. Your problem is you are stuck in the "property is your only man" minset/culture, it was "your only man" for past 15 years but it wont be for a long time again. Your thinking is clearly biased by your environment and those in it.0 -
ronbyrne2005 wrote: »Ha Ha, take your ball and leave the pitch. Your problem is you are stuck in the "property is your only man" minset/culture, it was "your only man" for past 15 years but it wont be for a long time again. Your thinking is clearly biased by your environment and those in it.
I took the ball and left the field as you call it as I won't be dragged into a personal slanging match. I could refute eveything that has been said, and I had it all written out, but I wouldn't accept those insults in a face to face debate, so I won't on this forum. My thinking is biased by what I have studied in uni and what I work at. I actually have a knowledge of the industry. Irish people have always, and will always, want to own their own house and land. Its in the Irish psyche, unlike places such as France and to a lesser extent England where people are content to rent for their whole lives. and thats why houses will continue to sell. Once the banks begin to lend again of course. the economic downturn won't last forever, and thats what some people on this forum don't seem to understand.0 -
If Irish people all want to buy their own homes, tell me who the BTL were supposed to be renting to? Oh - right - the immigrants. The immigrants who came to Ireland and de facto rented the houses for which they were building additional capacity.
I've lived in a lot of places. I've dealt with the rental market in a lot of places. I will give you that Irish people wnat their own homes. What you need to understand is that courtesy of rising unemplyment, specifically in the construction industry where employment figures are in deep deep trouble at the moment, and tightening credit criteria (eg 20% deposit on apartments), the amount of money available to buy property is contracting big time.
Put simply, the number of people willing to buy starter apartments of 1 and 2 bedrooms has dwindled to nothing because the fall off in capital appreciation makes the trade up property ladder route very unattractive, and the number of people with 10 times their salary to splash on average houses in Dublin suburbs is limited in the FTB market. Both sales and rental inventory are way up now on what they were 24 months ago. All this put together do not point to a recovery in property prices in the short term, even allowing for historically (again) low interest rates. There is an aspect of sentiment to all this, and the sentiment which was there 2 years ago is go.
Add to that immigration is falling off, and in fact, we are starting to see rising emigration rates also. Even with all the people renting who might have bought 2 years ago, rents are on the way down. Property prices in Ireland, despite contracting by something like 20-30% if you can even get a sale - and sales volume appears to be way down (I'm making this assessment based on the fact that inventory is rising and estate agents are laying off staff), are still out of kilter with basic fundamentals, eg salary multiples, rental ratios and sales supply levels which are extremely high compared to rates over the last 10 years.
Nothing you have said addresses any of these points.0 -
Eh for someone with such a knowledge of the industry, its odd that you don't realise that rental protections in places like France and Germany are far stronger than in Ireland, so it is possible to be a lifelong renter. The legislation and protection in Ireland is a fairly 19th century affair, so anyone that wants to start a family needs to buy. Its got nothing to do with some "Irish psyche".I actually have a knowledge of the industry. Irish people have always, and will always, want to own their own house and land. Its in the Irish psyche, unlike places such as France and to a lesser extent England where people are content to rent for their whole lives.0 -
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To be honest, I am not going to deal with you any more. and its not because of your views or because I don't know what I'm talking about, but rather because you can't seem to have a topical debate without consistently being obnoxious and inferring I'm stupid. I happen to know what I'm talking about, being in the property market, the occupation I am in, and the people I am surrounded by. And my capacity for understanding goes beyond what I read in the papers, unlike yourself. so good luck.
"To be honest" Calina in IMO is one of the most informed impartial poster on this particular forum. Comical Austin should know what he's talking about considering his profession and the people that surrounds him but he's one of the most clueless people on the subject.
The points you have made and your obvious lack of understanding of the market would prove otherwise, but feel free to take your ball and go home if you're not up to the challenge of a mature debate on the topic.0
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