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No living space in Dublin
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jimmycrackcorm wrote: »The banks should have never been allowed to give mortgages for the traditional standard which was 2.5 x primary income plus 1 x second income. We need to return to that.
This business of giving out multiples was crazy.
That's a good idea, but I'm not sure why people shouldn't be blamed for taking the multiple mortgages.0 -
Snakeblood wrote: »That's a good idea, but I'm not sure why people shouldn't be blamed for taking the multiple mortgages.
This thread is making me so depressed haha. Can you really blame people for taking out mortgages for 300k when everyone, including banks, told them that their house would be worth more than that within a year? Worst case scenario, in their heads, was that they would sell and break even, if they couldnt afford it. Besides, the banks were as much to blame for giving out dead-end loans.
I guess I havent made myself clear as to my main concerns.- My parents bought a three bedroom house twenty odd years ago for a mortgage of 30k punt (20 year mortgage, I think).
- I will probably get a mortgage for a two bedroom (with a bit of luck) for around €200k (25 to 30 year mortgage).
I am better educated than my father and have as good a job as he had, but I couldnt even dream of supporting a €200k mortgage solely. It seems as though we are working harder than our parents for less. What is the goal here?
If there is a plan, it doesnt care much about the "bottom rungs" of society (not that I would classify myself as being poor). People can say "that's the way the market works", or "that's life" or whatever, but it just seems grossly unfair. (I can already hear people saying, "Life's unfair" haha) If there isn't a plan, then I'm really worried.
It's awful being an idealist, I wouldnt wish it on anyone.0 -
Acoustic Fanatic wrote: »It's awful being an idealist, I wouldnt wish it on anyone.
I don't think you are an idealist or a socialist.
You're just pissed that the numbers don't currently add up for you.
You said you have a good job, are you saving towards a house with your girlfriend towards that goal?
If so, then you will be in a great position in years to come.0 -
You dont have to buy a house. Its not the law like.0
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Yes I do believe you can blame people for taking out a 300K mortgage thinking the worst case scenario was to sell at break even.
People who are incapable of understanding economics at even the most basic level and perhaps doing a Google search or look up the mortgage market on Wikipedia and a few articles would have wizened up before signing the dotted line for hundreds of thousands of euros.
Saying they didn't know better is a bad excuse - the banks had vested interests. Would you not blame the people during the Tulip Mania for being idiots either ? Incidentally ignorance is not a legal defense by the way and it never has been.
It's not the banks fault - it's the people who took out mega mortgages up to 12x annual incomes and more that are to blame for their recklessness. And many even went to buy homes in Spain, Croatia, Bulgaria.. Basically over leveraging themselves in property bubbles here, there and everywhere.
Borrowing money with the intent of making money is playing with fire. And many people got burned and now cry to mammy (the state) to help them as it was 'no fault of their own'. Me bollox.
In before 'just buying a home': A home is not a right - buying a home at any price is not a wise move. And people in massive negative equity are very much to blame themselves for buying into a bubble. The traditional multiple in western europe has been 2.5-3x annual salary for decades and decades. I've read articles going back to 2003 which cautioned that the industrial wage was not following the explosive growth in debth. That should have been a pretty damn big warning sign. And people ignored it for 'the feel good factor'. Well enjoy the NE I say. I refuse to forgive peoples debt as many didn't buy into this and we shouldn't be punished on our taxes.0 -
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i'm not sure if this works in ireland or not but it's interesting if you can listen to it http://www.bbc.co.uk/iplayer/episode/b0134sv6/Poorer_Than_Their_Parents_Housing/0
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Yes I do believe you can blame people for taking out a 300K mortgage thinking the worst case scenario was to sell at break even.
People who are incapable of understanding economics at even the most basic level and perhaps doing a Google search or look up the mortgage market on Wikipedia and a few articles would have wizened up before signing the dotted line for hundreds of thousands of euros.
Saying they didn't know better is a bad excuse - the banks had vested interests. Would you not blame the people during the Tulip Mania for being idiots either ? Incidentally ignorance is not a legal defense by the way and it never has been.
It's not the banks fault - it's the people who took out mega mortgages up to 12x annual incomes and more that are to blame for their recklessness. And many even went to buy homes in Spain, Croatia, Bulgaria.. Basically over leveraging themselves in property bubbles here, there and everywhere.
Borrowing money with the intent of making money is playing with fire. And many people got burned and now cry to mammy (the state) to help them as it was 'no fault of their own'. Me bollox.
I hate this viewpoint. I cant help feeling that people really enjoy watching people suffer in situations like this. "Serves them right" etc, etc. Maybe it does, but the banks are responsible as well. There are cases of bank managers who told people that they could afford higher mortgages than they could, so they could get higher bonuses. That happened.
Basically, they enslaved (some) people through ignorance and naiviety. I dont think it will happen again, but it is still disgusting to think that they are getting away with it. Admittedly some people just took a risk that they would get out before the bubble burst.0 -
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The banks shouldn't have been giving out the money - that much we can agree on. But it takes two to tango and placing the blame solely on the banks is not a balanced view point either.
People were willing to fall over themselves to buy at inflated prices and banks due to low interest rates were willing to allow it. Both parties are at fault here.
http://en.wikipedia.org/wiki/Tulip_mania
http://en.wikipedia.org/wiki/Greater_fool_theory
Please; It is relevant.0 -
Acoustic Fanatic wrote: »This thread is making me so depressed haha. Can you really blame people for taking out mortgages for 300k when everyone, including banks, told them that their house would be worth more than that within a year? Worst case scenario, in their heads, was that they would sell and break even, if they couldnt afford it. Besides, the banks were as much to blame for giving out dead-end loans.
I guess I havent made myself clear as to my main concerns.- My parents bought a three bedroom house twenty odd years ago for a mortgage of 30k punt (20 year mortgage, I think).
- I will probably get a mortgage for a two bedroom (with a bit of luck) for around €200k (25 to 30 year mortgage).
I am better educated than my father and have as good a job as he had, but I couldnt even dream of supporting a €200k mortgage solely. It seems as though we are working harder than our parents for less. What is the goal here?
If there is a plan, it doesnt care much about the "bottom rungs" of society (not that I would classify myself as being poor). People can say "that's the way the market works", or "that's life" or whatever, but it just seems grossly unfair. (I can already hear people saying, "Life's unfair" haha) If there isn't a plan, then I'm really worried.
It's awful being an idealist, I wouldnt wish it on anyone.
I can blame people for taking out loans they can't afford, thereby pushing up prices for people after them, yeah. If someone down the road from you bought shares in a horse on the principle that horses generally make money, would you be whinging about the horse breaking a leg? It's because you have a blind spot about property.
Your children can expect cheap housing for the reasons that have been repeatedly told to you and you repeatedly ignored. Grow up, you're not idealistic, you're pissed that you aren't getting a cheap house now.0 -
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The banks shouldn't have been giving out the money - that much we can agree on. But it takes two to tango and placing the blame solely on the banks is not a balanced view point either.
People were willing to fall over themselves to buy at inflated prices and banks due to low interest rates were willing to allow it. Both parties are at fault here.
http://en.wikipedia.org/wiki/Tulip_mania
Please; It is relevant.
Yeah, I agree that both parties are liable. The reason I place more blame on the banks is because they should know better. People can be naive/trusting/stupid0 -
Snakeblood wrote: »Grow up, you're not idealistic, you're pissed that you aren't getting a cheap house now.
+1.
I've read this thread a couple of times, thinking I've missed something and I genuinely wanted to contribute in a positive fashion.
But it is simply an incoherent whinge that tangents like a drunk anaconda.0 -
Snakeblood wrote: »I can blame people for taking out loans they can't afford, thereby pushing up prices for people after them, yeah. If someone down the road from you bought shares in a horse on the principle that horses generally make money, would you be whinging about the horse breaking a leg? It's because you have a blind spot about property.
Your children can expect cheap housing for the reasons that have been repeatedly told to you and you repeatedly ignored. Grow up, you're not idealistic, you're pissed that you aren't getting a cheap house now.
I dont know what your problem is, but take it somewhere else. I dont believe there will be cheap housing in Ireland for the foreseeable future. Just because I dont take your opinion as gospel doesnt mean you need to act like an ass. I definitely am pissed that Im not getting a cheap house now. That doesnt mean that I dont care about what kind of future I live in, or want my kids to live in.
As for your horse analogy, we're not talking about owning a car here. Houses are the base of most peoples wealth. Taking it from them normally means bankruptcy, and in Ireland that's a really tough sentence. Maybe you would prefer to see that, but I wouldnt. We're bailing the banks out begrudgingly, but if it was up to the pitiless Irish public, we'd all drown together.0 -
Acoustic Fanatic wrote: »I dont know what your problem is, but take it somewhere else. I dont believe there will be cheap housing in Ireland for the foreseeable future. Just because I dont take your opinion as gospel doesnt mean you need to act like an ass. I definitely am pissed that Im not getting a cheap house now. That doesnt mean that I dont care about what kind of future I live in, or want my kids to live in.
As for your horse analogy, we're not talking about owning a car here. Houses are the base of most peoples wealth. Taking it from them normally means bankruptcy, and in Ireland that's a really tough sentence. Maybe you would prefer to see that, but I wouldnt. We're bailing the banks out begrudgingly, but if it was up to the pitiless Irish public, we'd all drown together.
My problem is that you don't appear to be able to handle either points against what you are saying, or to be able to back up what you are saying. It's just hot air and whining about what you think you deserve. You just start repeating that you think house prices will rise, ignoring anything anyone says about factors against. If you don't want to discuss things, get a blog. If you do, talk to people about what they've said.0 -
Some people have mentioned that renting is just as expensive but that's the governments fault, they control 50% of the rental market in this country.
They could have kept the rents low but they were the ones driving them up, so many people bought investment properties knowing that most or all of their mortgage would be covered by the rental income.
If the government decided to lower rent allowance drastically then people would have no choice but to reduce their rents accordingly.
This would of course create more problems in itself for the country because it will be hard for the owners to make up the shortfall to pay the mortgage but it would also be harder for the banks to then repossess these homes if there are families living in them for years paying their rent and after making a life for themselves.0 -
I must object to the notion that a house is a base of wealth. The Germans, The French, The Scandinavians, the majority there does not own homes and they are very wealthy and they seem content and happy with bringing up a family in rented accommodation (their regulation is better, but no reason it could not be done better here as well).
A house is not a pension, it is not a nest egg, it is a house. It is not money.
It's an illiquid asset which may or may not represent some value but it is not a base of wealth. Savings and investments in stocks/bonds is a base of wealth. Something which has an outstanding debt to it in the form of a mortgage is a farcry from wealth. It is the exact opposite!0 -
Snakeblood wrote: »My problem is that you don't appear to be able to handle either points against what you are saying, or to be able to back up what you are saying. It's just hot air and whining about what you think you deserve. You just start repeating that you think house prices will rise, ignoring anything anyone says about factors against. If you don't want to discuss things, get a blog. If you do, talk to people about what they've said.
Fair enough. The reason I dont think house prices will fall is because the demand will return. I think that there are more people waiting for the markets to slump before they buy than are waiting to sell once the prices stabilize.0 -
Acoustic Fanatic wrote: »Houses are the base of most peoples wealth.
For a limited boom period maybe they were. For those that considered them to be a basis of weath they are nothing more than a depreciating asset
Prior to this for decades they were just homes.0 -
Acoustic Fanatic wrote: »There are cases of bank managers who told people that they could afford higher mortgages than they could
My girlfriend and I got a mortgage roughly two years ago. We were offered more than 2.5 times the amount we asked for. I don't understand what the bank was thinking though, the monthly repayment was more than the monthly net take-home of the bigger of our two salaries! Nuts!Acoustic Fanatic wrote: »People can be naive/trusting/stupid
Anyone who is naive or trusting when it comes to banks is stupid. Anyone that took the kind of mortgage we were offered (in 2009!) isn't safe to be let out on their own.
Ask your father what percentage of his pay went towards his £30k mortgage. His principle may have been £30k, but he probably had significantly higher interest rates to deal with which would narrow the gap that you see between your situation and his.0 -
Acoustic Fanatic wrote: »Fair enough. The reason I dont think house prices will fall is because the demand will return. I think that there are more people waiting for the markets to slump before they buy than are waiting to sell once the prices stabilize.
Why do you think demand will return? Given that wages are stagnant, emigration is rising, unemployment is up, public debt is high meaning higher taxes, interest rates have one way to go, and there's a large overhang of property held by nama to come on the market. Prices have fallen by 50% in the last five years, and the price fall doesn't really look like slowing down. Also, banks have been burned too and don't want to lend, and if they do lend, will gouge with interest rates to make up for all the tracker mortgages. Also people who have tracker mortgages will be very reluctant to move properties as their interest rates will then be exorbitant.
Edit: also, you say you think there are more people out there wanting to buy than want to sell. What are you basing that on?0 -
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I must object to the notion that a house is a base of wealth. The Germans, The French, The Scandinavians, the majority there does not own homes and they are very wealthy and they seem content and happy with bringing up a family in rented accommodation (their regulation is better, but no reason it could not be done better here as well).
A house is not a pension, it is not a nest egg, it is a house. It is not money.
It's an illiquid asset which may or may not represent some value but it is not a base of wealth. Savings and investments in stocks/bonds is a base of wealth. Something which has an outstanding debt to it in the form of a mortgage is a farcry from wealth. It is the exact opposite!
Good point. Though I would say, for the sake of argument, that if you are an average homeowner in Ireland, your house represents the vast majority of your assets.0 -
My girlfriend and I got a mortgage roughly two years ago. We were offered more than 2.5 times the amount we asked for. I don't understand what the bank was thinking though, the monthly repayment was more than the monthly net take-home of the bigger of our two salaries! Nuts!
Anyone who is naive or trusting when it comes to banks is stupid. Anyone that took the kind of mortgage we were offered (in 2009!) isn't safe to be let out on their own.
Ask your father what percentage of his pay went towards his £30k mortgage. His principle may have been £30k, but he probably had significantly higher interest rates to deal with which would narrow the gap that you see between your situation and his.
Good point. I will.0 -
Good point. Though I would say, for the sake of argument, that if you are an average homeowner in Ireland, your house represents the vast majority of your assets.
But it may be an asset but it is not money that can be readily extracted when needed. Ergo it is not wealth, it is a house people can live in. The act of selling is usually to buy another house. Which means the money is pretty much non existing in a sense at it isn't 'to spend' freely.
So the idea in Ireland that a house is a good investment strategy for the future is for the lack of a better word right now: dumb. I think a lot of people would need to familiarize themselves with bonds and stocks. Even buying the most conservative global investment fund would be better yield and lower risk than putting cash in the banks. And god forbid, into bricks and mortar.0 -
Snakeblood wrote: »Why do you think demand will return? Given that wages are stagnant, emigration is rising, unemployment is up, public debt is high meaning higher taxes, interest rates have one way to go, and there's a large overhang of property held by nama to come on the market. Prices have fallen by 50% in the last five years, and the price fall doesn't really look like slowing down. Also, banks have been burned too and don't want to lend, and if they do lend, will gouge with interest rates to make up for all the tracker mortgages. Also people who have tracker mortgages will be very reluctant to move properties as their interest rates will then be exorbitant.
Edit: also, you say you think there are more people out there wanting to buy than want to sell. What are you basing that on?
As far as I am aware there are no new houses being built in Dublin. While there are no new houses being built, there will still be more first time buyers getting ready for their first mortgage, in anticipation of the prices levelling. I think it's a safe assumption that over the last year, given the financial instability of Ireland, most people who would have gotten a mortgage decided to hold off until the prices stabilize.
There will also still be buy-to-rent/sell investors too, hoping to get in before the prices bounce back from the bottom.0 -
Acoustic Fanatic wrote: »As far as I am aware there are no new houses being built in Dublin. While there are no new houses being built, there will still be more first time buyers getting ready for their first mortgage, in anticipation of the prices levelling. I think it's a safe assumption that over the last year, given the financial instability of Ireland, most people who would have gotten a mortgage decided to hold off until the prices stabilize.
There will also still be buy-to-rent/sell investors too, hoping to get in before the prices bounce back from the bottom.
There are no new houses being built because there's a surfeit of accommodation. No one is buying. There are Nama houses that have not yet come onto the market. They're afraid to put them on the market because it will flood and house prices will drop like a stone. Banks are afraid of repossessing houses because the houses themselves are worthless compared to what was paid.Once the overhang of property is gone, it will again be worthwhile for someone to build houses. At the moment, there's no demand, so why should anyone build any?
A lot of people have in all likelihood neither the financial ability nor the desire to get back into the property market seeing as roughly 70000 people are having difficulty paying their mortgages.
Prices are too high at the moment, and dropping. People are waiting for lower prices, but people are also burned by the experience of the last ten years, they're leaving the country, and they're also unemployed where once they would have expected to be in permanent employment and buying.
Do you know how a buy to let investor works? They calculate the rental income from the property. At the moment, the government is subsidising roughly half the rental accomodation in Ireland. They pay rent allowance etc, which puts an artificial floor on rentals. Why drop the price more if you can get an unemployed person in and the government will pay their rent? That works up to a point, if the government can afford to pay the rent for half the country. As it stands, now they can't. So that's going to go.
That will have a knock on effect on rents for non social welfare people, dropping them too. So the buy to let investor will be getting out his calculator, and the sums won't add up for him. He expects a rental yield of maybe 6-8% to make it worth buying an illiquid asset instead of shares or something else. If rents drop, then his yield drops, so he won't buy until the house or apartment becomes cheaper.
He'll divest himself of the property he has or lower prices, or go bankrupt, and property prices will fall further. You see threats of people who will refuse to rent if the rental income fall too low. Those people are idiots who would rather make nothing than something. But someone will come in and buy a cheap house or apartment and rent them at a low enough level that he can make a profit and get the rent allowance.
House prices won't bounce back from the bottom. We are mired in an incredibly deep recession. People don't have the money to chase house prices back up (and that's how you get a bounceback).
House prices don't exist in a vacuum. In this country, people are afraid to buy, they have no jobs, they have no certainty, they have no lenders, they have lots of tax, they see little future.0 -
Excellent post Snakeblood.
I would like to just point out that a bounce back in property prices is the last thing this economy needs right now (nevermind the impossibility of that happening in the next many years). High cost of accommodation is not good for the economy - it increases cost of living which puts pressure on wages which reduces Irelands competitiveness (which is only saved by a low tax for MNCs right now).
We need cost of living to drop if we want the economy to recover. Not 'recoup' to 2006/2007 levels.0
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