Effect of budget 2010 on the Property Market

blah

mathie wrote: »

Take a look at this ...
http://www.bigfatpurse.com/wp-content/uploads/cycle-of-market-emotions.jpg

If 2005 / 2006 was 'Euphoria' then where are we now?

Where do you think we are now? I'm curious.

bmarley

steven.blanc wrote: »

I for one am delighted with the reform of stamp duty in this years budget.
The new rates of stamp duty are:
1% on all transactions up to €1,00,000 and 2% above, all this can do is help create confidence in the current economic crisis.

What do others think?

Yes, good news for some. Came to late for me though, I paid 10,000 in stamp duty in 2006 and the value of my house has been slashed almost in half. Any chance we might get a bit of a refund to pay off some of my mortgage? No, but you will pay property tax. It's a joke.:D

spockety

*YAWN*

Until the average house price gets back to about 4 times the average wage there is nothing to talk about.

Anybody who claims that it is currently a great time to buy is ignoring history for some reason, or is not looking back beyond 2006. It is not a great time to buy. In historical terms, it is a bloody awful time to buy. Come back and shill when house prices are reasonable, which they will be again no matter what measures anybody tries.

robd

steven.blanc wrote: »

I for one am delighted with the reform of stamp duty in this years budget.
The new rates of stamp duty are:
1% on all transactions up to €1,00,000 and 2% above, all this can do is help create confidence in the current economic crisis.

What do others think?

• Steven. You seem to have missed the last IBF report http://www.ibf.ie/gns/media-centre/news/10-11-30/Home_Purchasers_Dominate_Mortgage_Market.aspx
• It stated that FTBs are the largest segment of the market at 45.7% value and 41.3% volume. Previously they were exempt from stamp duty (up to 1 mil), now they have to pay 1% (up to 1 mil).
• Previously new houses were exempt from stamp duty now they're levied at 1% (up to 1 mil).
• Trader uppers require FTBs to purchase property off them to trade up.
• Many people who bought from about 2004 onwards are in negative equity.
• Banks must increase capital reserve to 12.5% which leaves them with little of no funds to give out.

Don't get me wrong, I totally agree with this change. Horse bolted aside.

Can't see how it will help the property market whatsoever though.

Rabidlamb

spockety wrote: »

[
Until the average house price gets back to about 4 times the average wage there is nothing to talk about.

I agree fully, question is what the average industrial wage will be in the future.
I saw some paper quoting it at €36k today but I'm not convinced.
I believe that it's coming closer to €30k in provincial towns.
In a few years you should be able to buy a modest 3 bed semi for €120k max in Carlow/Portlaoise/Mullingar etc.

fliball123

Can I just add something here to all Estate agents and Nay sayers that if someone out there is looking to buy and there are a lot of FTBs waiting to buy, My advice is to wait for at least another 6 months let this new property DB come online and we will get a feeling of exactly were property prices are. Having said that the possibility is that Interest rates and ECB rates which drive the banking rates will probably be higher ... Ideally what you should do is go to your bank get an aggreement on how much you can get and try and get the offer for 6 months (not sure if this is still possible) keep an eye on the ERSI stats and then look at this new DB which will have to be online sometime next year...

For those who say dont buy...People want their own place and for the Estate agents people are no longer going to be bullied by what you say...

Anyways good luck to all in there endeavours you will need it after that budget

spockety

I don't say "don't buy". People are free to do whatever they want with their money. I do however have a problem with people making claims about how good a decision it is from a financial perspective.

fliball123

spockety wrote: »

I don't say "don't buy". People are free to do whatever they want with their money. I do however have a problem with people making claims about how good a decision it is from a financial perspective.

Well you have to weigh up everything such as

How much are you paying on rent
How much will the interest move up
How much will property continue to fall
How much will the banks loan
How much more cash will be taken between now and 2014 in the next 3 budgets


These would be the 5 major factors for buying a house for anyone and it will be different for different people. Only they will know if its financally sound to do so . Also a lot of people are not doing it for the sake of financial gain ...they just want a place to live in.

The other thing that I have seen is rent has actually started to go back up.. has anyone else seen this in the last 6 months or so?

seamus

robd wrote: »

Can't see how it will help the property market whatsoever though.

I think you might be overestimating the impact of the 1% on FTBs.

On a €200k property (probably the middle-upper cost of a FTB property at this stage), your stamp duty is just €2k. Yes I said, "just", because as all of us who've bought property in the last ten years knows, this is less than what you'll have to pay your solicitor, and you would have far more than €2k set aside for sundry purchases in the process. It's not a small amount no, but buying a house is known as a large financial commitment so I don't think that 1% introduces an enormous barrier for FTBs.

If I'd had to pay 1% extra as an FTB, it wouldn't have been a barrier. Not in the slightest.

I think the core of your post is spot on though; a previously huge barrier for trader-uppers has now been removed, but negative equity is a far bigger barrier which will prevent people from moving onto a new home.

Do we have any idea how many homes were purchased by FTBs between 2004 and 2008? These are the people who can't move and if they make up a significent proportion of homeowners in the 25-40 age brackets, then their inability to move will keep the property market stagnant for years.

dory

Rabidlamb wrote: »

In a few years you should be able to buy a modest 3 bed semi for €120k max in Carlow/Portlaoise/Mullingar etc.

No need to wait my friend, Some nice little bit of real estate available for that price in Carlow.

robd

seamus wrote: »

I think you might be overestimating the impact of the 1% on FTBs.

It's more that I think it all adds up. It's certainly not a stimulus.

Bear in mind that a few years ago they could get 100% mortgage, pay for the furniture on a credit card, and get a loan for the solicitors fees and other sundries from the Credit Union, in the name of a holiday. All ridiculous, but many cases of it posted on this site.

Fast forward to today. Same solicitors fees, less salary due to tax increases and even pay decreases. Be doing well to borrow 92% and loan offer will be reduced due to higher criteria and lower salary, that's if they get an offer, let alone can they actually draw the mortgage down. And now 1% stamp duty. OK, on the positive side big price reductions.

A lot done more to do (on house prices), to quote a certain soon to be ex leaders party.

Mr. Loverman

mathie wrote: »

Did I say the economy is going to "turn a corner" and house prices would start rising again?
No I didn't so let me clarify it for you.

I was making the point that no-one can predict the future.

Do you remember late 2005 / early 2006?
A majority of people were in a buying frenzy.
A majority of people were advising people to buy.
A majority of people thought property prices would always go up.

Now we have a majority of people saying the exact opposite.

I'm not saying we're anywhere near the bottom.
I'm just saying the herd behaviour and an inability to predict the future are factors.

Take a look at this ...
http://www.bigfatpurse.com/wp-content/uploads/cycle-of-market-emotions.jpg

If 2005 / 2006 was 'Euphoria' then where are we now?

I am not the majority of people. I have been saying since the mid-2000s that we are in a property bubble. I am a regular on thepropertypin. I have numerous bannings from askaboutmoney because I pointed out the obvious: we are in a property bubble.

It is insanely obvious Ireland has at least a decade of pain ahead of itself.

mathie

blah wrote: »

Where do you think we are now? I'm curious.

I'd say we're between fear and desperation with the possibility of a dead cat bounce now with the 1% stamp duty.

What about yourself?

who_ru

if only there were strict guidelines brought in 10 years ago in relation to build quality, size, sound proofing of apts and of course regulating management companies then maybe we wouldn't be so keen on purchasing 3 beds all the time. if only eh....now there is a lost opportunity. probably half of all europeans, many with kids, manage to live in good apts all over europe but oh no not here, they threw anything up, hopeless sounding proofing, shoebox size, awful electrical heating, amateur landlords everywhere.

rokossovsky

Still sick over handing them 56K only 2 years ago. Ah shure it was for the better of the counthry.:mad:

tazzzZ

I am a FTB and looking to get on the market myself. the budget has defo made me hold off.

tbh though its getting to the stage where buying a house is money spent and not money invested as it used to be thought of. its getting to be like buying a car and as soon as u drive out of the showroom knock 5k off the value. unfortunately that 5k equates to a hell of alot when it comes to a property!

iguana

mathie wrote: »

Now we have a majority of people saying the exact opposite.

I'm not saying we're anywhere near the bottom.
I'm just saying the herd behaviour and an inability to predict the future are factors.

I can't tell you tonight's Lotto numbers but I can tell you what will happen if you leave a pot of water on a hot hob overnight. You don't need to be psychic to understand cause and effect.

We have been "bailed out" by the IMF at a punitive interest rate. The economy won't be recovering for quite a long time and until it does house prices aren't going anywhere but down.

(Unless of course we end up with a new currency and then it's possible that houses will probably end up costing 100's of millions of New Irish Punts but that will be because of the same rampant inflation that causes a pint of milk to cost over a grand.)

mckildare

steven.blanc wrote: »

I love nothing more than to prove peoples opinions of property professionals wrong by always offering an honest, professional and courtious service.

My point is that the Government has made a significant gesture towards the Property Market and should be commended for trying to fix the problems they have helped create no matter how late.!!

You're one of a kind OP! As an honest estate agent maybe you can go tell people what their houses are actually worth so the property crash can kick off again, current prices are nowhere near what I can afford in a lifetime so I have no intention of buying yet, even though I have the Irish bug to own a house

BobbyD10

I wouldn't think the Budget will make much difference to the property market.

I have been waiting patiently for the last few years and as a prospective customer to this industry I too will be waiting further down the line.

The budget has meant people have less money in their pockets.

I'm not sure the interest rates are as low as people seem to think, your looking at rates over 3% now. They will go up again in the new year as the banks are waiting for the Christmas period to finish.

Now that I am talking about banks, for property to shift there needs to be money and banks are just not lending. Even professionals are being refused mortgages.

I thought there is a lot of reliefs abolished from the budget which may not improve things either.

Anyway, its all about people's personal circumstances and whether they can afford to purchase property. I do think that there is some demand out there that currently has been shoveled into savings in the banks.

Its all about confidence really and that is in short supply at this point.

CuppaCocoa

Very pleased! My partner has just bought (not signed contract for!) the house next door to me and the budget has saved her over 5k! That's a fitted kitchen!

irishh_bob

Rabidlamb wrote: »

I agree fully, question is what the average industrial wage will be in the future.
I saw some paper quoting it at €36k today but I'm not convinced.
I believe that it's coming closer to €30k in provincial towns.
In a few years you should be able to buy a modest 3 bed semi for €120k max in Carlow/Portlaoise/Mullingar etc.

id say 90 k , i reckon you will be able to buy a 3 bed semi in the likes of beaumont in dublin or 120 k in less than give years

ArraMusha

Property prices in general are still way over priced.

Banks are not lending and interest rates (for fixed mortgages) are high and will continue to rise.

A house or other property will only sell for what someone is willing to pay for it, or can pay for it.

Right now there is no 'will' and there is a rising number who can't.

The only way is down...baby.

blah

mathie wrote: »

I'd say we're between fear and desperation with the possibility of a dead cat bounce now with the 1% stamp duty.

What about yourself?

I agree, I think people have finally gotten past denial, but it took a while. I don't think the 1% stamp duty will trigger a dead cat bounce, I think property values will continue going down.

ricman

You can already buy, ten year old semi ds for 100k in mullingar in private, non council estates.AT one time they were valued at 180k, now they are 100k approx,the original sale price was 80k in 2001.IN a certain estate where my friend bought one.THE BANKS were loaning people 50k,on top of their original mortgages ,because of the rise in value .That 100k rise in value has disappeared in the last 2 years.
i know house x in mullingar 5bed ,posh estate was bought for 220 k new house, in 2001, value went up to 500k, is now valued at 230k.i dont know was there someone mad enough to pay
500k, but they were advertised at that price before the crash.id hate to be in negative equity by 250k for a house in mullingar.

magneticimpulse

lilybarlean wrote: »

Very pleased! My partner has just bought (not signed contract for!) the house next door to me and the budget has saved her over 5k! That's a fitted kitchen!

I put my head in my hand at this comment. You have to be joking right?? You seriously think she has "saved" 5k??? Hmm some people will never learn about property bubbles ;(

smog

seamus wrote: »

I think you might be overestimating the impact of the 1% on FTBs.

On a €200k property (probably the middle-upper cost of a FTB property at this stage), your stamp duty is just €2k. Yes I said, "just", because as all of us who've bought property in the last ten years knows, this is less than what you'll have to pay your solicitor, and you would have far more than €2k set aside for sundry purchases in the process. It's not a small amount no, but buying a house is known as a large financial commitment so I don't think that 1% introduces an enormous barrier for FTBs.

If I'd had to pay 1% extra as an FTB, it wouldn't have been a barrier. Not in the slightest.

I think the core of your post is spot on though; a previously huge barrier for trader-uppers has now been removed, but negative equity is a far bigger barrier which will prevent people from moving onto a new home.

Do we have any idea how many homes were purchased by FTBs between 2004 and 2008? These are the people who can't move and if they make up a significent proportion of homeowners in the 25-40 age brackets, then their inability to move will keep the property market stagnant for years.

Yes it is an issue, many have stayed out of the crazy market, refused to pay silly money.

Larger and larger deposits are required that you have to have up front, also solicitors fees etc. Its a LOT to save without the government trying to poke those new to the market.

Adding a couple of grand on to this for FTBs will put them off. I know this because i am wanted to be one. I am 33 and have waited 7 years for this crap to settle to some level of normality and now the cart is been rocked again. I talked to the bank and found out what i could borrow .. but tbh now i couldn't be bothered again. More and more i just want to pack up shop and move to a country that i can simply settle and bring up a family in.

This only benefits the rich. No one else is "trading up" they cant afford to anyway. Once again the person with nothing gets shafted a little more

magneticimpulse

irishh_bob wrote: »

id say 90 k , i reckon you will be able to buy a 3 bed semi in the likes of beaumont in dublin or 120 k in less than give years

You can already "buy" property without hassle the price down from daft.ie 4 bed house for €65k...some people still have their eyes closed.

Zamboni

Lenihan said this would be an assistance to people in NE to downsize.
Paul is in NE
Peter is a FTB

Paul has now had stamp duty drastically reduced should he wish to downsize to a smaller property.
Peter now has to pay a 'small' stamp duty.

So the government is robbing Peter to pay Paul whilst making their commissions on 'envisaged' increase in transactions.

So is the government merely transferring hardship?

mathie

Zamboni wrote: »

Lenihan said this would be an assistance to people in NE to downsize.
Paul is in NE
Peter is a FTB

Paul has now had stamp duty drastically reduced should he wish to downsize to a smaller property.
Peter now has to pay a 'small' stamp duty.

So the government is robbing Peter to pay Paul whilst making their commissions on 'envisaged' increase in transactions.

So is the government merely transferring hardship?

Sure the last few years has been a transfer of wealth from the young FTB generation to the older geenration. Why let that trend stop?

For all those in NE there are a lot of rich people who sold them that house.
That money - unlike Keyser Soze - didn't just vanish.

irishh_bob

magneticimpulse wrote: »

You can already "buy" property without hassle the price down from daft.ie 4 bed house for €65k...some people still have their eyes closed.

im glad to hear it , we need a cleanout of old stock , was watching a programme on the bbc round the time of the mid term elections in america , journalist was speaking to a realtor in a run down neighbour hood in some town with huge unemployment , price for some of the houses on a particular street was 5 k , granted it was made of timber but the principal is the same , if no one wants it , it has no floor price

property is going to be toxic in this country for the next decade , even prices go through the floor , punitive taxes on owning property will put off even those with plenty of cash to pick up properties for a song , property is a ball and chain for young people who may feel they have to leave the country due to uncertain employment prospects , thier will also ( i believe ) be a cultural change in how we view property , young kids growing up will witness their parents struggle terribley with mortgage repayments and will reject the traditional wisdom of owning property being a number one priority once you leave school - start work etc

everything points to it being a toxic assett going forward