Pushed out of the market

Marchbride

Makes for interesting reading. This is what I was trying to say yest in another post. Middle class are being priced out of market in certain parts of Dublin.

http://www.independent.ie/business/personal-finance/property-mortgages/no-homes-for-middle-earners-in-capital-city-30033844.html

moxin

As another famous bull poster here said before, you'll have to buy in the "lower class" areas or simply move to a commuter town

godtabh

or rent?

snubbleste

godtabh wrote: »

or rent?

The horror! :eek:

average_runner

Marchbride wrote: »

Makes for interesting reading. This is what I was trying to say yest in another post. Middle class are being priced out of market in certain parts of Dublin.

http://www.independent.ie/business/personal-finance/property-mortgages/no-homes-for-middle-earners-in-capital-city-30033844.html

If they are been priced out, then either the buyers aren't middle class or the area is not middle class anymore.
Simple really

marathonic

The market dropped by well over half before turning. If they could previously afford but are now priced out, it's their own fault. They should have bought in 2012/3 when they could afford to buy instead of waiting on the expectation of further falls.

If prices fall significantly and come within your grasp, you should buy instead of waiting in the hope of saving another €10k. You might never see such savings and if you do, it equates to about €50 per month on a mortgage - significantly less than a single increase in rent. A home is a home after all.

I suspect that we'll see many more of these "I waited because I wanted to buy in an area I couldn't afford and now I'm priced out of any area I'm willing to live".

redbaron_99

I can never understand the stigma attached to renting in this country. My girlfriend and I have been renting a beautiful four bedroom semi-d in a very nice area of Dublin for years. The rest of our friends have all purchased their homes, most in serious negative equity, they all live in the far reaches of Dublin county, and are all miserable, yet they still give us the line of: "You're mad - renting is dead money".

and giving it to the bank to pay interest isn't...?

average_runner

redbaron_99 wrote: »

I can never understand the stigma attached to renting in this country. My girlfriend and I have been renting a beautiful four bedroom semi-d in a very nice area of Dublin for years. The rest of our friends have all purchased their homes, most in serious negative equity, they all live in the far reaches of Dublin county, and are all miserable, yet they still give us the line of: "You're mad - renting is dead money".

and giving it to the bank to pay interest isn't...?

You might be a renting a nice 4 bed but you have no assurance that you be there next year, you can't do what you want to the house to make it your home because there is no long term rent agreements like in europe.

Negative Equity means nothing if your not selling. You bought the house at a price you thought it was worth at the time.

Also your paying someone else's interest to the bank!

Idbatterim

The market dropped by well over half before turning. If they could previously afford but are now priced out, it's their own fault. They should have bought in 2012/3 when they could afford to buy instead of waiting on the expectation of further falls.

If prices fall significantly and come within your grasp, you should buy instead of waiting in the hope of saving another €10k. You might never see such savings and if you do, it equates to about €50 per month on a mortgage - significantly less than a single increase in rent. A home is a home after all.

I suspect that we'll see many more of these "I waited because I wanted to buy in an area I couldn't afford and now I'm priced out of any area I'm willing to live".

Totally agree with this, no I wasnt in a posititon to buy, but I remember at one stage, probably about 2010, 2011, good houses in my area, Dublin 14, were at one stage so bloody cheap, how much further could they really fall, and if they did, it wouldnt be the end of the world. buying a house for 300k and have it lose 10%, is very different to 800 or 900k at 10%, which is what these houses were getting. I would have jumped in at 300k, at that stage to hell with it if they dropped further, once its a long term home and you are happy there. Of course money is important, but its not absolutely everything...

redbaron_99

average_runner wrote: »

You might be a renting a nice 4 bed but you have no assurance that you be there next year, you can't do what you want to the house to make it your home because there is no long term rent agreements like in europe.

Negative Equity means nothing if your not selling. You bought the house at a price you thought it was worth at the time.

Also your paying someone else's interest to the bank!

Well, thanks for picking out the negatives of renting a home. Personally I have an agreement with the landlord that I can make changes to the house, as long as I let them know about it. Although, that's not not the norm.
Most of my friends didn't buy their homes with a view to living in them long term. They bought to get on "the property ladder". And had no plans to stay in them long term, and hate that they are now stuck in areas that they dislike.

Fair enough, the landlord can opt not to renew my lease, but that's fine with me. There are plenty of nice houses to rent.
And that works both ways! I actually like that I'm not tied down to anything long term, because, God forbid, I might lose my job, I am not restricted to searching for new employment within a certain area.

It works for me. It works for a lot of people. It doesn't work for everyone.
You have a different opinion, fair enough.
:cool:

ted1

redbaron_99 wrote: »

Well, thanks for picking out the negatives of renting a home. Personally I have an agreement with the landlord that I can make changes to the house, as long as I let them know about it. Although, that's not not the norm.
Most of my friends didn't buy their homes with a view to living in them long term. They bought to get on "the property ladder". And had no plans to stay in them long term, and hate that they are now stuck in areas that they dislike.

Fair enough, the landlord can opt not to renew my lease, but that's fine with me. There are plenty of nice houses to rent.
And that works both ways! I actually like that I'm not tied down to anything long term, because, God forbid, I might lose my job, I am not restricted to searching for new employment within a certain area.

It works for me. It works for a lot of people. It doesn't work for everyone.
You have a different opinion, fair enough.
:cool:

My issue with Rent, is that you don't own the place.

When i finish paying my mortgage in 20 years I'll be under 55 and have 10 working years left, I can then top up my pension instead of paying rent or mortgage.

If i'm renting I have to pay rent till the day i retire, and then either find an new income or move as i'll have to continue paying rent.

I could also sell the house and move to the sun, live off the difference between house and house purchases or rent when i'm living away.

ted1

redbaron_99 wrote: »

I can never understand the stigma attached to renting in this country. My girlfriend and I have been renting a beautiful four bedroom semi-d in a very nice area of Dublin for years. The rest of our friends have all purchased their homes, most in serious negative equity, they all live in the far reaches of Dublin county, and are all miserable, yet they still give us the line of: "You're mad - renting is dead money".

and giving it to the bank to pay interest isn't...?

But at the end of the the mortgage term you own the property and can sell it or continue living there without any rent or mortgage.
so after paying rent for 1,500 for 20 years in rent you have spent 360,000
but after paying a mortgage of 1,500 for 20 years you have asset that may be worth 180+.

each year after the 20 years the rent spends 18,000 where as the owner pays nothing.

who_ru

Isn't the problem access to credit coupled with a chronic lack of supply? It's hard to imagine a more perfect storm for the first time buyer looking to buy in Dublin. Bidding contests back in full swing, poor quality property in many areas requiring major renovation.

Larbre34

Its quite funny to imagine there will be small cohort of people who bought in 2013/14 in Dublin who will find themselves in newly negative equity by 2017 or so. Whats happening now in Dublin is a mini-bubble created by warped market conditions. When the cash buyers run out and de-strangulated supply resumes, those price gains will ebb away once again. The fundamentals to a housing market level, ie buying power (salaries) and credit (still crunched) do not equate with prices just now. 2012 values were about right in Dublin, out to 2020 at least.

redbaron_99

Different strokes for different folks. It suits me.

murphaph

Cash buyers just as likely to be foreign investors so long as the rental yields hold up.

ted1

Larbre34 wrote: »

Its quite funny to imagine there will be small cohort of people who bought in 2013/14 in Dublin who will find themselves in newly negative equity by 2017 or so. Whats happening now in Dublin is a mini-bubble created by warped market conditions. When the cash buyers run out and de-strangulated supply resumes, those price gains will ebb away once again. The fundamentals to a housing market level, ie buying power (salaries) and credit (still crunched) do not equate with prices just now. 2012 values were about right in Dublin, out to 2020 at least.

say there is a 15% drop that 45k on 300.
rent in the 3 years to 2017 will be 54k.

negative equity only affects people when they sell. People should have learnt that they should be buying properties that will suit there needs for longer then 3 years.

lima

ted1 wrote: »

But at the end of the the mortgage term you own the property and can sell it or continue living there without any rent or mortgage.
so after paying rent for 1,500 for 20 years in rent you have spent 360,000
but after paying a mortgage of 1,500 for 20 years you have asset that may be worth 180+.

each year after the 20 years the rent spends 18,000 where as the owner pays nothing.

Eh, the owner pays Interest. He pays rent to the bank.

And while the renter is paying rent, he is also saving, and by 55 he would have a lump sum saved up which he could use to buy a place.

There is also the fact the the renter could have rented in a more desirable location compared to that if he had bought (i.e D3, D4 versus Lusk)

ted1

lima wrote: »

Eh, the owner pays Interest. He pays rent to the bank.

And while the renter is paying rent, he is also saving, and by 55 he would have a lump sum saved up which he could use to buy a place.

There is also the fact the the renter could have rented in a more desirable location compared to that if he had bought (i.e D3, D4 versus Lusk)

Renting is more expensive than a mortgage. how would a person renting save money, if eh manages to then the mortgage holder will save more?
by 55 the person who owns a property will be in a much better position.

average_runner

redbaron_99 wrote: »

Well, thanks for picking out the negatives of renting a home. Personally I have an agreement with the landlord that I can make changes to the house, as long as I let them know about it. Although, that's not not the norm.
Most of my friends didn't buy their homes with a view to living in them long term. They bought to get on "the property ladder". And had no plans to stay in them long term, and hate that they are now stuck in areas that they dislike.

Fair enough, the landlord can opt not to renew my lease, but that's fine with me. There are plenty of nice houses to rent.
And that works both ways! I actually like that I'm not tied down to anything long term, because, God forbid, I might lose my job, I am not restricted to searching for new employment within a certain area.

It works for me. It works for a lot of people. It doesn't work for everyone.
You have a different opinion, fair enough.
:cool:

Totally true, we are all different

Frank Lee Midere

Larbre34 wrote: »

Its quite funny to imagine there will be small cohort of people who bought in 2013/14 in Dublin who will find themselves in newly negative equity by 2017 or so. Whats happening now in Dublin is a mini-bubble created by warped market conditions. When the cash buyers run out and de-strangulated supply resumes, those price gains will ebb away once again. The fundamentals to a housing market level, ie buying power (salaries) and credit (still crunched) do not equate with prices just now. 2012 values were about right in Dublin, out to 2020 at least.

Yes, the Independent is a disgrace. Its basically promoting the same crap again, 450K houses which used to be 250K, isn't that great? ( Disguised as concern).

This kind of thing is panicky claptrap:

"In The Park, in Cabinteely, number 10A on Sycamore Close was sold for just €200,000 in April 2013, before it was re-sold for €328,000 just six months later."

Really? I suppose it didn't end up begin expensive anyway ( 328k doesn't exclude the middle classes) but all this is happening with low growth, higher income tax and property tax, increased mortgage arrears and it just isn't going to go on. So whomever bought that will see more negative equity.

Frank Lee Midere

ted1 wrote: »

say there is a 15% drop that 45k on 300.
rent in the 3 years to 2017 will be 54k.

negative equity only affects people when they sell. People should have learnt that they should be buying properties that will suit there needs for longer then 3 years.

People should have learnt to stay out of a bubble.

Ray Palmer

redbaron_99 wrote: »

I can never understand the stigma attached to renting in this country. My girlfriend and I have been renting a beautiful four bedroom semi-d in a very nice area of Dublin for years. The rest of our friends have all purchased their homes, most in serious negative equity, they all live in the far reaches of Dublin county, and are all miserable, yet they still give us the line of: "You're mad - renting is dead money".

and giving it to the bank to pay interest isn't...?

I think you misunderstand how people view it if you see it as stigma. There are real world issues with staying renting. Your pension will need to be much larger in order to do this when you are older.

While you are renting you are also unlikely to get other items of your own like furniture. I know you can rent properties that are not furnished but not many people do.

I find it hard to believe everybody you know who moved way out in the suburbs are all miserable. I can see somebody telling you their woes and also saying you have to buy. It doesn't sound human for a group of people. I can imagine one or two.

In saying that I could never get why so many of my friends moved so far out. It wasn't so much the prices keeping them out there it was their perceived value for money. They were saying I was mad to buy a small house in Dublin when they could get something much bigger further out. Later on many realised the true cost of their commutes and sold up and moved closer. The damage was done as the Dublin house prices rose more than where they lived. So they ended up down sizing where I could upsize as my kept within the Dublin rises. It actually was better because FTB homes rose more than larger properties. For the price of a luxury car we were able to buy a house twice the size in a nicer area. So now my costs are less than theirs but I live in a bigger house closer to employment.

While I get why people say things about not being able to afford in a middle class area means you aren't middle class it is not quite true. Due to the high prices people living in such areas became a lot more mixed. Income no longer was/is the driver value of assets you had/have are the driver. So now you have doctors, lawyers, architects etc... living in what were working class areas and also tradesmen, manual workers, etc... living in areas that were traditionally middle class areas.

lima

ted1 wrote: »

Renting is more expensive than a mortgage. how would a person renting save money, if eh manages to then the mortgage holder will save more?
by 55 the person who owns a property will be in a much better position.

Perhaps, not by much though and not all the time. Also, a renter could have a better quality of life living in a part of a city where a buyer otherwise could't afford. that in itself is priceless.

There is an interesting thread here:

http://www.askaboutmoney.com/showthread.php?t=185724

My rent is less that a mortgage for a similar place in D6, and I save e1200-1500 a month on top of that.

redbaron_99

lima wrote: »

Perhaps, not by much though and not all the time. Also, a renter could have a better quality of life living in a part of a city where a buyer otherwise could't afford. that in itself is priceless.

There is an interesting thread here:

http://www.askaboutmoney.com/showthread.php?t=185724

My rent is less that a mortgage for a similar place in D6, and I save e1200-1500 a month on top of that.

This is the true value of renting for me. Quality of life and a certain amount of freedom. Two things that I value greatly.

But, hey, it's dead money. I'll be worse off when I retire at the age of 68.

Roger_007

Most of the discussion on this is about Dublin prices. The increase in Dublin didn't happen elsewhere so there is good value to be had outside Dublin. The only problem is that there is not much supply either to buy or to rent.
There is an acute shortage of housing in all areas in the east of the country which is not going to be resolved anytime soon. There is very little building going on because builders can't make any profit at present prices.
As economic conditions improve, the shortage of housing will eventually drive prices up everywhere east of the Shannon.

redbaron_99

Roger_007 wrote: »

Most of the discussion on this is about Dublin prices. The increase in Dublin didn't happen elsewhere so there is good value to be had outside Dublin. The only problem is that there is not much supply either to buy or to rent.
There is an acute shortage of housing in all areas in the east of the country which is not going to be resolved anytime soon. There is very little building going on because builders can't make any profit at present prices.
As economic conditions improve, the shortage of housing will eventually drive prices up everywhere east of the Shannon.

I think the heart of the problem is that the cost of living in general is far too high in this country. That in turn means wages are too high, which means there's a shortage of jobs, etc. Ireland took a wrong turn around 15 years ago and have kept going. Sorry for the rant.

ted1

lima wrote: »

Perhaps, not by much though and not all the time. Also, a renter could have a better quality of life living in a part of a city where a buyer otherwise could't afford. that in itself is priceless.

There is an interesting thread here:

http://www.askaboutmoney.com/showthread.php?t=185724

My rent is less that a mortgage for a similar place in D6, and I save e1200-1500 a month on top of that.

No mention of the fact that you have an asset at the end.

My mortgage is about 500 less than rent. ( bought in May 2012)

For people with wife and kids ownership also offers added security

murphaph

lima wrote: »

Eh, the owner pays Interest. He pays rent to the bank.

but the bank won't mind if he paints his living room bright pink

Electric Sheep

redbaron_99 wrote: »

I think the heart of the problem is that the cost of living in general is far too high in this country. That in turn means wages are too high, which means there's a shortage of jobs, etc. Ireland took a wrong turn around 15 years ago and have kept going. Sorry for the rant.

Ireland took a wrong turn a lot longer ago than 15 years.

Pro Hoc Vice

average_runner wrote: »

You might be a renting a nice 4 bed but you have no assurance that you be there next year, you can't do what you want to the house to make it your home because there is no long term rent agreements like in europe.

Negative Equity means nothing if your not selling. You bought the house at a price you thought it was worth at the time.

Also your paying someone else's interest to the bank!

So all these people in arrears http://www.centralbank.ie/polstats/stats/mortgagearrears/Documents/data.xls know where they will be living next year. Negative is a very serious issue if you can not repay the loan.