Central Bank to limit amount banks lend for home purchase

desertcircus

I'd like to see a change in the planning process, whereby each area has a presumed minimum number of floors for any new development. I'm sick of seeing buildings torn down and replaced with new ones only a couple of floors higher. We don't have much by way of transport infrastructure to allow growth across a larger area, so we may as well sweat the assets we do have. Charlemont Luas stop is flanked on all four sides by office buildings, and the newest is only six floors high. Why on earth are we building six-storey office blocks right next to one of the biggest transport systems in the city? If there is demand for office space, then build up, not out. Any redevelopment should as a matter of course involve a huge increase (doubling as an absolute minimum) in floorspace on the site, and there should be a punitive tax on unused land. Ramp up office building heights in particular, and the pressure on land around Dublin should drop.

We have a capital city that appears to be running out of room. Improving transport systems is far too expensive an option, especially since the existing system means that there's no one central terminus that drops the bulk of people to work. The only alternative is to make our existing systems work as hard as possible and take some of the pressure off land prices in Dublin.

kandoola

I think im in the minority, but I think Dublins, and other Irish cities charm is that there are no high rises.
I think the city would be ruined with them.

Hillybilly4

http://www.breakingnews.ie/ireland/20-house-deposit-rule-to-be-delayed-652543.html

Hillybilly4

Hillybilly4 wrote: »

http://www.breakingnews.ie/ireland/20-house-deposit-rule-to-be-delayed-652543.html

I think there's a bit of wishful thinking at play here in some corners of the media. Honohan said it will prove a bit of a push to get it all done by Jan 1. But I'm fairly sure he was talking about weeks rather than months. Seems to be for technical reasons - consultation ends first week in December and then Christmas looms so reading all the submissions and publishing a response before the holidays is a stretch. But there's no serious delay. 'We're not hanging around' - to quote the Guv'nor.

He was asked why he doesn't wait a few months until a mortgage insurance scheme could be fleshed out. No way, says he.

Also, in that article Ross Maguire of New Beginning is quoted but it's a bit ambiguous. Having seen so many in mortgage arrears, New Beginning is in favour of the new rules. As far as mortgage insurance goes, it's not clear to me whether he's saying "Yay people can have a mortgage and an extra insurance policy so they can spend more on housing" or "You do realise that all of this makes home-ownership more expensive, don't you?"

You wouldn't think it from reading the CSO figures which show prices accelerating but there are a few quotes from property-industry types that point to a broader slow-down - which they say will be accentuated by the Central Bank's new rules. (I suppose the October CSO figures published on Wednesday reflect houses that went sale agreed in the summer - it takes a couple of months for things to be finalised and to show up in the stats).

First up, Pat Davitt, the Chief Executive of the Institute of Professional Auctioneers and Valuers:

“There is a crisis looming. Things have slowed since September. There are not as many buyers out there and more people are turning to renting but the properties just aren’t there for them.

<snip>

“We feel that more and more people will have to turn to renting if the 20 per cent deposit rule is enforced by the Central Bank and that will only put rents higher and makes fewer properties available,” he said.

Next up, Dr John McCartney, Head of Research at Savills (and a former CSO statistician):

“I think we’re going to see a slowdown in house price growth...because the amount of cash that’s been driving the market for the past two years is starting to recede,” he said.
Dr McCartney said in the case of cash buyers the “mattress money” invested in housing in the past number of years had “mobilised really rapidly but once it’s spent it’s spent and I think that money has washed through the market as this stage”.
He said heightened activity by investors in the residential property market had been fuelled by a high yield on rental income relative to the amount paid for the property but added that “yield is becoming suppressed again as prices shoot back up” meaning the market was less attractive to investors.
Dr McCartney said a dampening of interest by investors would be accelerated when the Capital Gains Incentive - an inducement which means certain property investments do not attract capital gains tax in the first seven years of ownership - is withdrawn from December 31st.
“If investors and cash buyers are out of the market then who is left? It’s the traditional mortgage finance buyer and I think, when you are dealing with traditional mortgage finance buyers they are going to be a lot more price sensitive...and ultimately that will result in a slowdown in price growth,” he said.
Dr McCartney added that proposals by the Central Bank to set most loan-to-value ratios at 20 per cent and to limit mortgages to 3.5 times gross income would also feed into a slowdown in prices.

I'm not enjoying this year's runaway price rises so this is all good news to me. Perhaps I'm cherry-picking quotes that suit me but, between the Central Bank, removal of CGT exemption, and the supposed drying up of 'mattress money', it looks like a perfect storm - as long as Honohan hangs in there against political pressure, which I now think he will.

gaius c

seamus wrote: »

Yes it is prime land, and it probably would be expensive. But you're asking the question of where we're going to put homes and I've shown you an enormous piece of empty land right in the city centre - one of many such places.

Just off the top of my head, only about a half of the Clancy Quay site is developed and every day going to work, I pass the curiously spread out St Teresas Gardens, which is max 5% occupied and occupying an enormous site.

There's also a huge number of derelict buildings in the city centre. The owners of these should be penalised for wasteful utility of land. There's a load of these buildings around Camden St.

The Spider

gaius c wrote: »

Just off the top of my head, only about a half of the Clancy Quay site is developed and every day going to work, I pass the curiously spread out St Teresas Gardens, which is max 5% occupied and occupying an enormous site.

There's also a huge number of derelict buildings in the city centre. The owners of these should be penalised for wasteful utility of land. There's a load of these buildings around Camden St.

Ok I'll help out here, here's a map of all the derelict buildings in Dublin, it's interesting if nothing else, it's from last year so don't know how much has changed.

https://www.google.com/maps/d/viewer?msa=0&mid=zBV1ZXSbw8o8.kZQPnROzMgCU

jay0109

There's a few places around the Quays currently acting as car parks that you can see on that map which aren't tagged, for example

The Spider

jay0109 wrote: »

There's a few places around the Quays currently acting as car parks that you can see on that map which aren't tagged, for example

You need parking in the city centre, so I'd say that's a legitimate use, also car parks are a serious revenue generator.

Greyian

The Spider wrote: »

You need parking in the city centre, so I'd say that's a legitimate use, also car parks are a serious revenue generator.

If derelict buildings were knocked down and rebuild, a lot of car parking space could be put underground, beneath the new buildings. We could also build some taller car parks, reducing the need for as much space to be used for parking structures.

P. Breathnach

Greyian wrote: »

If derelict buildings were knocked down and rebuild, a lot of car parking space could be put underground, beneath the new buildings. We could also build some taller car parks, reducing the need for as much space to be used for parking structures.

I'm waiting to see the 14-storey car parks!

The Spider

Greyian wrote: »

If derelict buildings were knocked down and rebuild, a lot of car parking space could be put underground, beneath the new buildings. We could also build some taller car parks, reducing the need for as much space to be used for parking structures.

First off you can't knock down a lot of the derelict buildings they need to be redeveloped keeping the original structure in place. That was a lot of the problem with Dublin in the first place, do I need to mention Wood Quay, the heritage of the city has to be preserved.

Maybe that's why these buildings are derelict because it's difficult to redevelop whilst keeping the original structure in place. That's not to say that they can't be redeveloped at a future date.

Or where the bank takes up a massive chunk of georgian street on Baggot street. Any development needs to take all of this into account.

Paddy1234

I have been looking for about a year in Dublin. I am finally convinced the market is turning.
Got a phone call from Sherry Fitz asking me how I was getting on with my search etc etc.
They hadn't time to do any of that craic before and I have noticed a lot less people at viewings.

I hope I'm right.

Buying a house should not be a gamble. If we had a properly functioning property market house prices would increase 5% a year and then you wouldn't have any of this crazy carry on.

kandoola

This new insurance scheme sounds dangerous to me.

Ask all of the people who had homebond and now have pyrite issues how homebond is working out for them.

MarkAnthony

Paddy1234 wrote: »

I have been looking for about a year in Dublin. I am finally convinced the market is turning.
Got a phone call from Sherry Fitz asking me how I was getting on with my search etc etc.
They hadn't time to do any of that craic before and I have noticed a lot less people at viewings.

I hope I'm right.

Buying a house should not be a gamble. If we had a properly functioning property market house prices would increase 5% a year and then you wouldn't have any of this crazy carry on.

I hope you're right. Been looking myself but I'm still seeing silly carry on. I think the CGT exemption has been pushing things along in certain situations, hopefully that will stop in the new year.

Trying to bring this back on topic a bit, I was actually disappointed the 20% rule will be delayed. I think it was cooling the Dublin market a bit, now I don't know what's going to happen in the new year.

Some of these calculations are off btw guys. We've a combined household income of c.60K we can't borrow anything like 210K despite a 100K deposit because the wife is on contract and I'm PT employed. I'm sure most people don't fall into the standard 2 x FT job category. We'll be lucky to be able to borrow 150K which means we are forced to take on a renovation job.

matt-dublin

kandoola wrote: »

This new insurance scheme sounds dangerous to me.

Ask all of the people who had homebond and now have pyrite issues how homebond is working out for them.

Homebond was a different animal and only lasted 10 years after initial purchase I think.

Just saved new build apartments having to pay for home insurance in their mortgages. Which wouldn't have covered their pyrite problems anyway!

kandoola

matt-dublin wrote: »

Homebond was a different animal and only lasted 10 years after initial purchase I think.

Just saved new build apartments having to pay for home insurance in their mortgages. Which wouldn't have covered their pyrite problems anyway!

Still got dropped like a hot snot as soon as there were going to be hundreds of claims.
People were hung out to dry.
What do you think will happen if there is another property crash and tens of thousands will be looking to this new insurance.

Deco99

Its very obvious the government want to see price rises continue and the media is shockingly complicit in pushing this agenda. Hoonahan is the only person making sense, looks like the lobbyist are greasing the right pockets. Is there anyone besides central bank pushing the sensible option or is it likely the bankers and speculators are going to see this madness continue?

matt-dublin

kandoola wrote: »

Still got dropped like a hot snot as soon as there were going to be hundreds of claims.
People were hung out to dry.
What do you think will happen if there is another property crash and tens of thousands will be looking to this new insurance.

The new insurance only applies when you default not when there's a crash.

It's also subsidised by the borrower so it's a proper policy.

Home bond was the responsibility of the developer, but sure if the developer goes bust of course nothing is going to get fixed or payed.

gaius c

kandoola wrote: »

This new insurance scheme sounds dangerous to me.

Ask all of the people who had homebond and now have pyrite issues how homebond is working out for them.

There was an article recently on how much the insurance would cost and basically a 90% mortgage would work out cheaper. It's just a wheeze to try and squeeze more cash out of FTBs to keep the ponzi scheme going.

gaius c

MarkAnthony wrote: »

Trying to bring this back on topic a bit, I was actually disappointed the 20% rule will be delayed. I think it was cooling the Dublin market a bit, now I don't know what's going to happen in the new year.

It's a pretty good indicator of how untrustworthy our media is that you immediately dig into actual attributed quotes to try and work out what was actually said and it appears that Honohan actually said it will be a challenge to get it ready in time, which is not quite the same thing as it being delayed.

who_ru

Deco99 wrote: »

Its very obvious the government want to see price rises continue and the media is shockingly complicit in pushing this agenda. Hoonahan is the only person making sense, looks like the lobbyist are greasing the right pockets. Is there anyone besides central bank pushing the sensible option or is it likely the bankers and speculators are going to see this madness continue?

I agree wholeheartedly about the media agenda of pimping high property prices and cheerleading every price increase. But as far as Honahan is concerned this 20% deposit requirement is coming straight from the EU. They do not want to see a situation again whereby Irish banks need bailing out due to unregulated lending and dire government policy.

Honahan is under instruction, plain and simple.

TheDriver

And thankfully following instruction from those with no vested interest other than good of the future

who_ru

TheDriver wrote: »

And thankfully following instruction from those with no vested interest other than good of the future

Noonan is already trying to undermine the new rules.

http://http://www.independent.ie/business/personal-finance/michael-noonan-new-central-bank-mortgage-deposit-rules-too-strict-30782154.html

gaius c

Link doesn't seem to be working for me.

kandoola

matt-dublin wrote: »

The new insurance only applies when you default not when there's a crash.

It's also subsidised by the borrower so it's a proper policy.

Home bond was the responsibility of the developer, but sure if the developer goes bust of course nothing is going to get fixed or payed.

What do you think is going to happen when there is a crash. All the defaults will come at one.
Im not buying it. This insurance is another ill thought out way to line the pockets of others, with money out of FTBs pockets. First insurers pockets, The the govt will get VAT and tax on it and levies too. Then when it all goes wrong there will be more levies on every insurance policy, be it related to property or not. And it will make people think they are really covered and have them part with even more money than they ordinarily would have when buying property. Its an elaborate scam.

who_ru

gaius c wrote: »

Link doesn't seem to be working for me.

You're right it doesn't work which is strange. The essence of the story is that Noonan intends to have words with the CBoI in an effort to get them to 'soften' the new deposit requirements. More political interference in an effort to sustain high prices. He is a sinister operator that guy.

TheDriver

Or maybe he knows he will be told where to go so saying he will try is best publicity he can get??

Lucy B

I know I'm going to be attacked for saying this, I'm clearly in the minority here, and while I so agree with careful lending, I just hope it is delayed, hope political pressure will help because we will have our deposit saved for at end of March and it's not fair that we are so close and if we need another 10% then I fear it will be years before we can buy. So hard to find houses. So few on market.

So I've my toes and fingers crossed that this doesn't come in for another few months. While I see where ye are all coming from re sensible lending and bubbles, but for some of us, we are so close......

Mongfinder General

who_ru wrote: »

I agree wholeheartedly about the media agenda of pimping high property prices and cheerleading every price increase. But as far as Honahan is concerned this 20% deposit requirement is coming straight from the EU. They do not want to see a situation again whereby Irish banks need bailing out due to unregulated lending and dire government policy.

Honahan is under instruction, plain and simple.

Under instruction from whom?