Only 4/10 Under 35's can afford a mortgage

Mr. Loverman

ted1 wrote: »

rent was €1150, mortgage after relief is €750, insurance is €60 a month. €810 a month. =saving off €340 (obvioulsy there is maintenance costs, but i can do most myself so will be better off) i had bin charges already..

it's the same house I was renting but about 200 meters away in a slightly better estate.

i'll also own the property at then end of the mortgage, meaning i can retire without having to worry where i'll live

What about all the costs associated with buying the property?

What about when interest rates increase?

What about negative equity?

What about the intangible items such as lack of mobility due to owning?

There are pros and cons to buying now. More cons than pros, IMO.

ted1

Mr. Loverman wrote: »

What about all the costs associated with buying the property?

What about when interest rates increase?

What about negative equity?

What about the intangible items such as lack of mobility due to owning?

There are pros and cons to buying now. More cons than pros, IMO.

Didn't have many costs for buying, there's a solicitor in the family, for mobility I can always rent it out. There is no negative equity, I bought at a third of 2008 price.

I have no rent to pay when i'm older.

StillWaters

Mr. Loverman wrote: »

What about all the costs associated with buying the property?

What about when interest rates increase?

What about negative equity?

What about the intangible items such as lack of mobility due to owning?

There are pros and cons to buying now. More cons than pros, IMO.

• Costs of buying are now cheaper than they have been for years, Stamp Duty is 1%, and legal and engineer prices are competitive
• When interest rates rise, rents will rise, there is a direct correlation.
• Regarding NE, most people buying now are putting down hefty deposits, so are protected somewhat from NE.
• Certainly home ownership is not for everyone, if you foresee a need for mobility, it would be silly to buy.

Mr. Loverman

StillWaters wrote: »

• Costs of buying are now cheaper than they have been for years, Stamp Duty is 1%, and legal and engineer prices are competitive
• When interest rates rise, rents will rise, there is a direct correlation.
• Regarding NE, most people buying now are putting down hefty deposits, so are protected somewhat from NE.
• Certainly home ownership is not for everyone, if you foresee a need for mobility, it would be silly to buy.

You still have to pay stamp duty and the legal and engineer fees, and in my experience rent prices do not track interest changes.

The type of properties I am interested in generally are quite expensive, so I can rent a very nice property in a very nice location for significantly less than the cost of the mortgage. I am able to save the difference between the rent price and the mortgage price.

I do intend to buy (for cash) when the **** storm has somewhat passed in the next 10 years. Until then I will live in a beautiful property and save cash.

Kosseegan

StillWaters wrote: »

• When interest rates rise, rents will rise, there is a direct correlation.
  

Interest rate rises tend to coincide with rents falling. Rising interest rates often mean less employment since business have higher costs. Alos some people start to rent out rooms in their houses or rent out holiday homes in times of higher interest rates.

Victor

In the short term, prices are likely to fall as you won't be able to get TRS any more.

Villa05

seamus wrote: »

There's no correlation between arrears and negative equity.

Being in negative equity doesn't make your mortgage more expensive. If anything, a large proportion of those who bought in the last ten years are on tracker mortgages and are therefore enjoying the most affordable mortgage rates out of anyone.

Have you any citations for your claim that under 35 homeowners were the most affected by job losses? How do you know it wasn't the over-40 homeowners? Or under-30 renters?

You can't make claims about demographics without data.

KBC Report Google Doc's link for your convenience http://bit.ly/NQ3QY0

The drop in employment has also been heavily concentrated in the under 35’s. Between the third quarters of 2010 and 2011, numbers at work in Ireland fell by 2.5%. Over the same period the number of under 35’s in jobs declined by 7.6% whereas the number of over 35’s in work actually increased, albeit marginally, by 0.8%. This reinforces the strongly divergent trend evident since the downturn began. While overall employment fell by 16% since late 2007, this has been almost entirely due to a 31.6% fall in employment among under 35’s. Over this period numbers at work aged over 35 fell by just 3%. Clearly, the very skewed age profile of jobs losses reinforces the weakness in activity in consumer spending and housing within the Irish economy as the under 35’s are the key spending age group. These trends also dovetail with the pick-up in outward migration

What % of these were renters or Homeowners I don't know, but I do know that if you had a pulse and showed signs of life you qualified for a mortgage during the bubble.

I know of 2 single parents on state support only who got a (non subprime) mortgage in 2004

Villa05

seamus wrote: »

Being in negative equity doesn't make your mortgage more expensive. If anything, a large proportion of those who bought in the last ten years are on tracker mortgages and are therefore enjoying the most affordable mortgage rates out of anyone.
.

They may have a better time of it on trackers, but if they have lost their job, they cannot afford the mortgage

Those still employed may be on reduced pay plus being on a tracker means they are trapped and out of the game as far as buying a bigger house is concerned. If they sell and re buy the tracker is gone

With so many loss making trackers, the banks have little to lend and will up interest rates to new customers to subsidise trackers. This will further dampen demand

Ray Palmer

Villa05 wrote: »

They may have a better time of it on trackers, but if they have lost their job, they cannot afford the mortgage

Those still employed may be on reduced pay plus being on a tracker means they are trapped and out of the game as far as buying a bigger house is concerned. If they sell and re buy the tracker is gone

With so many loss making trackers, the banks have little to lend and will up interest rates to new customers to subsidise trackers. This will further dampen demand

NOT EVERYBODY! The whole population has lost their jobs and lost wages. Not even the vast majority. Why do people insist on assuming everybody bought at the peak and lost their jobs. There is a lot of fear which is the biggest problem.

Nothing new but it is pretty irritating how people just go with the herd. No different from those who claimed the prices would go up forever.

Lots of unknowns going on and lots of really new situations. The euro really is a game changer.

Villa05

@ray palmer
Did u read my posts before replying

Mr. Loverman

Ray Palmer wrote: »

it is pretty irritating how people just go with the herd. No different from those who claimed the prices would go up forever.

I really disagree with this.

The herd during the bubble were making decisions based on faulty data (e.g. lying estate agents, politicians, bankers, their accountant sister in law, etc.) whereas the people now who say the economy is ****ed etc. are making decisions based on reality.

IMO the safest option at the moment is to continue renting, move your savings to Germany, and see what happens. There is a realistic chance the euro may not exist in its current form in 12 months which potentially means another **** storm for Ireland. And obviously our economy continues to tank which probably means a continuing decline in house prices.

There is no urgency to buy now. Keep your emotions in check and use your head.

Cool Rider

I am pretty obvious that property punters forgot to take into a/c one small anomaly, i.e. what will happen if euro fails which is getting highly likely with each passing day.
"IMF warns euro's survival is at stake unless action taken"
http://www.irishtimes.com/newspaper/breaking/2012/0622/breaking4.html
PS: I see house prices stabilising in last month or so which is just gonna be a short term factor, in long term faltering Euro economies will bring down house of cards with them. So going against my emotions decided top halt the home purchase till I will get 30% discount next year:)

Theboinkmaster

ted1 wrote: »

rent was €1150, mortgage after relief is €750, insurance is €60 a month. €810 a month. =saving off €340 (obvioulsy there is maintenance costs, but i can do most myself so will be better off) i had bin charges already..

it's the same house I was renting but about 200 meters away in a slightly better estate.

i'll also own the property at then end of the mortgage, meaning i can retire without having to worry where i'll live

I'm sorry but this is 4 year old arithmetic, you've left off loads of costs including the most important one depreciation.

You buy now for €300k. In 2 years time same property is €250k. You've just spent €50k plus interest over life of mortgage so maybe €70-80k. That is a real cash expense.

Theboinkmaster

Mr. Loverman wrote: »

I really disagree with this.

The herd during the bubble were making decisions based on faulty data (e.g. lying estate agents, politicians, bankers, their accountant sister in law, etc.) whereas the people now who say the economy is ****ed etc. are making decisions based on reality.

IMO the safest option at the moment is to continue renting, move your savings to Germany, and see what happens. There is a realistic chance the euro may not exist in its current form in 12 months which potentially means another **** storm for Ireland. And obviously our economy continues to tank which probably means a continuing decline in house prices.

There is no urgency to buy now. Keep your emotions in check and use your head.

100% agree - anyone buying now is mental.

ted1

Theboinkmaster wrote: »

I'm sorry but this is 4 year old arithmetic, you've left off loads of costs including the most important one depreciation.

You buy now for €300k. In 2 years time same property is €250k. You've just spent €50k plus interest over life of mortgage so maybe €70-80k. That is a real cash expense.

it's a three bed semi D in a very nice part of SoCodu I can tell you it's not going to go much lower.

my rent was 14,000 per year which is about 7% of my mortgage. if the price drops by 21% over 3 years i'm still in a better situation. i will own the property at the end of the mortgage.