Shortage of houses...

davet82

http://www.independent.ie/business/personal-finance/property-mortgages/now-market-faces-major-shortage-of-family-homes-29087113.html

A CHRONIC shortage of family homes is being caused by a logjam of people unable to move house.

Young boom-time buyers and older empty-nesters are stalling recovery in the market because they are either unable or unwilling to move.
The younger ‘negative-equity’ generation can’t afford to sell or trade up to larger homes to accommodate a growing family.

Some 300,000 people are in negative equity, where the value of their home is now less than they borrowed to buy it.

Meanwhile, there is also a reluctance to sell among older people whose children have left home and who could manage in a smaller house.
Instead of trading down and freeing up a family-sized home, they are staying put because they don’t want to sell at a discount.

The double whammy is hitting property market recovery seriously as there are also few new homes being built, according to a new report by housing economist Ronan Lyons.

another reason and then the solution...

The economist said that just 8,600 first-time-buyer mortgages were drawn down last year. But between 20,000 and 25,000 people get married every year, with most of these forming new households.

This implied a need for twice the level of house building, Mr Lyons added.

Build more houses so? IDK is that not what got us into the trouble in the first place?

Anybody looking to buy notice the 'shortage'? I know it may depend where you are looking but where exactly? (just curious)

Ray Palmer

The best solution is to give a tax incentive for older people to sell their houses. Ideally for a pension plan. Older houses are in better serviced areas for schools, shops etc...

It would reduce the need for children to be driven to school. Older people could have property designed for their needs due to failing health.

Every house near me has been selling very quickly. They are family homes in Dublin

kennyb3

^^^ tax incentives, housing market moving = shudder (no matter how well intended)

seamus

Really the issue is with the 300,000 in negative equity. If they had access to buy or sell, then there would be demand for the older people's homes and they'd be happier to sell even at the "discount" (read: correct price).

The suggestion isn't entirely stupid. Effectively what it means if you increase building is that you leapfrog the 300,000 people in NE (because that's property which is unavailable to the market), cutting them off the "ladder" completely and removing them from the market. It means that the housing market begins to return to normal and moves on without those in negative equity.

Of course the sheer size of the negative equity quotient is an issue, and if building resumes, that quotient will only get larger as older homes devalue even more.

An SSIA-style scheme might be useful to encourage older people to sell up, if that's seen as necessary. So allow them to put (say) 200k of the proceeds into a Government pension account, with a guaranteed (e.g.) 10% per annum payable on it until retirement age. Someone who's 60 and has just seen their pension value collapse might jump at the chance to invest 200k now and and see their pension pot grow by €300k.

Zamboni

There is absolutely no shortage of houses in Ireland.

There are plenty there waiting to be repossessed and sold.

Zamboni

And fwiw - Ronan Lyons is starting to become part of the problem.

The economist said that just 8,600 first-time-buyer mortgages were drawn down last year. But between 20,000 and 25,000 people get married every year, with most of these forming new households.

This implied a need for twice the level of house building, Mr Lyons added.

No it doesn't Ronan.
It implies the market should be allowed to function correctly.
The answer is not more supply.

Ray Palmer

Zamboni wrote: »

There is absolutely no shortage of houses in Ireland.

There are plenty there waiting to be repossessed and sold.

Did you read the article?

There is a shortage of houses avalible to buy in the cities. Unless you magically know the properties that could be reposesed are all in the cities and are family houses you are wrong.

bidiots

Housing shortage in a specific market - should be the headline

Zamboni

Ray Palmer wrote: »

Did you read the article?

There is a shortage of houses avalible to buy in the cities. Unless you magically know the properties that could be reposesed are all in the cities and are family houses you are wrong.

There are houses in every city that are should be repossessed and sold.
It is impossible to even state that there is a shortage whilst the market is in its current limbo.
This type of shortage speculation is redundant until the state/banks deal with arrears and the repossession moratorium.

quad_red

As long as my tax money continues to subsidise the non-payment of a considerable number of mortgages (buy to lets and residentials) then I won't be able to buy a home.

In the areas we're looking at there is a shortage of 3/4 bed family homes.

kennyb3

Yes, there is a shortage due to market manipulation - nothing else. We've net emigration every year for the last 3 years plus.

This looks like another 're-float' scheme.

The article stinks of a 'ladder system' also.

Ritchi

Zamboni wrote: »

There is absolutely no shortage of houses in Ireland.

There are plenty there waiting to be repossessed and sold.

There is no shortage in the country as a whole, but there are shortages of houses in certain areas. Mainly in areas that don't have space to build more.

seamus

I'm not sure if "market manipulation" is accurate.

Our estate is about 500 homes a mixture of apartments, duplexes and houses, all built after 2003. Occupancy is 100% (effectively). There isn't a single unit up for sale and one or two apartments up for rent.

The "upgrade" from this estate is to larger homes, all built between 1970 and 2000, just down the road from our estate. Again, practically 100% occupancy and nothing for sale.

In this case the local market isn't being manipulated, the market is just stuck in checkmate because nobody can move anywhere. And it would be the same in most estates that are within reasonable distance of cities.

It's only well outside of the cities that properties are being sat on, but the main issue is not that the properties aren't being put up for sale, it's that nobody wants to buy them. I would rather stick with my cramped home 10km from Dublin than switch to a five-bed house in the arse end of nowhere. That's the reality of it. A lot of the properties that NAMA and the banks are "holding back" simply won't sell at any price.

Zamboni

quad_red wrote: »

As long as my tax money continues to subsidise the non-payment of a considerable number of mortgages (buy to lets and residentials) then I won't be able to buy a home.

In the areas we're looking at there is a shortage of 3/4 bed family homes.

This is the forgotten irony of this situation.

Tax paying, renting, potential FTBs are being shafted by a scam that they are also expected to pay for.

Ray Palmer

Rents are going up and houses are selling in Dublin. There is a noticible shift near me for sure. Most of the property near me is probably owned out right judging by the age of the people about. There won't be many repossions around me.

Zamboni

Ritchi wrote: »

There is no shortage in the country as a whole, but there are shortages of houses in certain areas. Mainly in areas that don't have space to build more.

You are wrong.

I live in the sunny suburbs of South Dublin.
The current impression is that there is a shortage of houses in South Dublin.
This is complete and utter BS.

There are BTL houses that the landlords cannot and will not ever pay for.
The houses should be repossessed and sold.
And as such, it is impossible to make an assumption of shortage in SCD without a decision made on repossession and sale of these properties.

There are people sitting in houses that they cannot and never will be able to afford.
The houses should be sold.
And as such, it is impossible to make an assumption of shortage in SCD without a decision made on repossession and sale of these properties.

godtabh

Something similar is happening in London.

In the past FTB bought 1/2 bed flats. More recently they are no buying 3/4 bed houses meaning the demand and prices for 3/4 houses are going up.

People are waiting longer to buy and buying not for now ie a you married couple but for the future ie family and kids

quad_red

My young family and I live in rented accommodation.

If we fail to pay our rent we will be evicted. There will be no commotion or outcry.

Our taxes are subsiding the mortgages of people who live in houses that they cannot (and will never be able to) afford and who continue to live in them.

Houses that we could never afford. Yet we're paying for them to remain there at the bank's expense.

Never mind f**king investment properties.

It's so utterly depressing.

Ray Palmer

Zamboni wrote: »

You are wrong.

I live in the sunny suburbs of South Dublin.
The current impression is that there is a shortage of houses in South Dublin.
This is complete and utter BS.

There are BTL houses that the landlords cannot and will not ever pay for.
The houses should be repossessed and sold.
And as such, it is impossible to make an assumption of shortage in SCD without a decision made on repossession and sale of these properties.

There are people sitting in houses that they cannot and never will be able to afford.
The houses should be sold.
And as such, it is impossible to make an assumption of shortage in SCD without a decision made on repossession and sale of these properties.

I don't get how you know this? It sounds like pure speculation.

CreepingDeath

davet82 wrote: »

Build more houses so? IDK is that not what got us into the trouble in the first place?

Another MAJOR reason why people aren't selling houses to trade up/down is they'll lose their tracker mortgages.

I've been looking into this recently.
I've a house in West Dublin on a tracker mortgage and am considering moving to Drogheda.

If I borrow the exact same amount to sell up and buy another similar house, then my mortgage interest rate goes from 1.9% to 4.7% immediately.

That works out at an extra €250 per month for 15 years.
At least €55k extra in interest fees.

So even people in positive equity are trapped by tracker rates especially with AIB raising them more, and the possibility of them rising to 6 - 7% in the mid-term future.

kennyb3

^^^ yep, that's a huge huge factor, anyone on a tracker is going nowhere.

Zamboni

Ray Palmer wrote: »

I don't get how you know this? It sounds like pure speculation.

The Central Bank and IBF don't exactly give details of the individuals on their releases in relation to mortgage arrears.
But it would be ignorance of the highest order to assume that all unsustainable mortgages are on properties outside of cities.

EricPraline

Zamboni wrote: »

I live in the sunny suburbs of South Dublin.
The current impression is that there is a shortage of houses in South Dublin.
This is complete and utter BS.

There are BTL houses that the landlords cannot and will not ever pay for.
The houses should be repossessed and sold.
And as such, it is impossible to make an assumption of shortage in SCD without a decision made on repossession and sale of these properties.

But is the above not just your impression/assumption too? Perhaps what you are describing is the case. But a slightly different case may be that there are many residents in SCD who have underperforming BTLs in less salubrious locations. Repossession of those BTLs won't boost the stock in SCD.

As skeptical as I would be about Indo property articles, my own impression is that the part below rings true. There are large houses in SCD that aren't being sold because the owners won't sell them "for less than they're worth", they're waiting for the rebround etc.

Meanwhile, there is also a reluctance to sell among older people whose children have left home and who could manage in a smaller house. Instead of trading down and freeing up a family-sized home, they are staying put because they don’t want to sell at a discount.

Of course we're both probably just making guesses based on a small sample size and hearsay.

D3PO

quad_red wrote: »

My young family and I live in rented accommodation.

If we fail to pay our rent we will be evicted. There will be no commotion or outcry.

Our taxes are subsiding the mortgages of people who live in houses that they cannot (and will never be able to) afford and who continue to live in them.

Houses that we could never afford. Yet we're paying for them to remain there at the bank's expense.

Never mind f**king investment properties.

It's so utterly depressing.

what a crock of crap :rolleyes: your taxes are not subsidising anything. Nobody will get a free ride the wheels of democracy may run slowly but those that cant / wont pay will get their come uppance eventually.

I also love how renters think their taxes are more important than others. Im a fully compliant mortgage payer my taxes are just as important as yours so why do you feel mentioning that you are a renter has any weight when making statements about reposessions ?

Kosseegan

Repossessing BTLs will contribute to a shortage or rental properties so buyers will benefit at the expense of renters. It would make more sense to make it feasible for people in high demand locations to sell and move to low demand locations which have a surplus of property. For example, could some estates in places like Longford be made into retirement villages for downsizers relocating from family homes in Dublin.

kippy

CreepingDeath wrote: »

Another MAJOR reason why people aren't selling houses to trade up/down is they'll lose their tracker mortgages.

I've been looking into this recently.
I've a house in West Dublin on a tracker mortgage and am considering moving to Drogheda.

If I borrow the exact same amount to sell up and buy another similar house, then my mortgage interest rate goes from 1.9% to 4.7% immediately.

That works out at an extra €250 per month for 15 years.
At least €55k extra in interest fees.

So even people in positive equity are trapped by tracker rates especially with AIB raising them more, and the possibility of them rising to 6 - 7% in the mid-term future.

In certain areas there are no doubt a shortage of certain types of accomodation.
This fact coupled with the issue you have mentioned above are why people are tending not to want to move anywhere.

I had a very honest chat with an EA recently who advised that the "bottom" is nowhere near yet and will not be met until:
1. The banks close in on the non-performing BTL accomodation and put them on the market.
2. The insolvency bill is enacted.

He also said that there is a shortage of certain types of house and an inability of those without houses to even get a mortgage at this point.

D3PO

Kosseegan wrote: »

Repossessing BTLs will contribute to a shortage or rental properties so buyers will benefit at the expense of renters. It would make more sense to make it feasible for people in high demand locations to sell and move to low demand locations which have a surplus of property. For example, could some estates in places like Longford be made into retirement villages for downsizers relocating from family homes in Dublin.

who wants to move to Longford form Dublin though. No disprespect to anybody in Longford but people dont want to move away from family , friends and familiarity plus a big city with all the ameneties they need to retire in Longford, or Leitrim or Cavan or any other relatively un urban county,

Piriz

Kosseegan wrote: »

Repossessing BTLs will contribute to a shortage or rental properties so buyers will benefit at the expense of renters. It would make more sense to make it feasible for people in high demand locations to sell and move to low demand locations which have a surplus of property. For example, could some estates in places like Longford be made into retirement villages for downsizers relocating from family homes in Dublin.

Cant imagine there is any market demand for such a proposal.
Identifying older people living in nice houses as a cause of housing shortages is a bit silly imo.

Considering the banks potentially have lots of homes on their books: if an individual can not afford their mortgage; they should be offered a lesser house.
e.g. if you own a mortgage of 500,000 but you can not afford this, you should be offered a house which is worth what you can afford.. fair is fair.
This places the more expensive homes back on the market..

Ritchi

Zamboni wrote: »

The Central Bank and IBF don't exactly give details of the individuals on their releases in relation to mortgage arrears.
But it would be ignorance of the highest order to assume that all unsustainable mortgages are on properties outside of cities.

There is a lot of assumptions being made, so if I can make a couple more?

Most properties that are in mortgage arrears are from properties that were bought post-2000, so if we can work out where most houses were bought in that time, we should be able to work out what the likely hood of houses becoming repossessed are in an area.

My guess is that most houses bought in that time frame are in the areas that have had new developments built. Of course there are a number of them in SCD, notably in Sandyford and surrounding areas. So if we use the Dublin South constituency for comparison?

• In 1996, the number of houses/bungalows was 35, 506
• In 2011 it was 40,324. A net increase of 4,818
• There were 8,709 dwellings sold(according to the ppr) in the whole of Dublin last year(I can't find stats for Dublin South easily)

So, assuming that it's only new houses that are in neg eq(obviously not the case) there are 4.418 that have a possibility of falling into this bracket. Obviously not all of them would be, I would guess at somewhere about 10% of them could be, so 442 of them. Or even double it if you want. Even if we talked about 1000 houses in this area, it's not going to mean much cheaper houses, even if they come onto the market at the exact same time, which they won't.

It's hardly a ground breaking number given that easily that amount will sell again this year in Doublin South. We're not talking about empty houses all over the place and ghost estates(unfinished apartments may be the exception, but we're talking about houses)

quad_red

D3PO wrote: »

what a crock of crap :rolleyes:

Touché sir.

D3PO wrote: »

your taxes are not subsidising anything. Nobody will get a free ride the wheels of democracy may run slowly but those that cant / wont pay will get their come uppance eventually.

The market is not being allowed to stabilise naturally. There is huge (and costly) state intervention to prevent it happening.

And there is banging on about debt forgiveness every day of the week. Debt forgiveness is not free. Every cent of debt forgiveness will come from the tax payer.

I have no faith in there being any sort of equitable solution to any of this. The Croke Park Agreement enshrines that the unsustainable wages and benefits of existing public servants were prioritised as the terms and benefits of new starters were savaged. Our idea of a 'bank debt deal' is for our betters to accept a mountain of debt that the young will bear the brunt of paying.

D3PO wrote: »

I also love how renters think their taxes are more important than others. Im a fully compliant mortgage payer my taxes are just as important as yours so why do you feel mentioning that you are a renter has any weight when making statements about repossessions ?

:rolleyes:

quad_red wrote: »

Our taxes are subsiding the mortgages of people who live in houses that they cannot (and will never be able to) afford and who continue to live in them.

You are hereby informed that as a compliant mortgage payer you were included in the 'Our' taxes bit.

Ray Palmer

Zamboni wrote: »

The Central Bank and IBF don't exactly give details of the individuals on their releases in relation to mortgage arrears.
But it would be ignorance of the highest order to assume that all unsustainable mortgages are on properties outside of cities.

That kind of is my point that it is pure speculation in fact wild speculation.

I don't hear anybody saying there are none. If anything it is likely to be a small amount given it is an area close to the biggest employment area with the highest wages in the most desired neighbourhoods. There doesn't seem to be much logic to why it would be considered to be a large amount of property.

I just don't get why you think it is such a substantial figure and you don't seem to have any reason for saying it is.