Central Bank to limit amount banks lend for home purchase

jay0109

Glenbhoy wrote: »

Are the current properties in NE? I would think (no info on this) that the 15% exemptions will be hoarded until later in the year when they have a better idea of what figure they can put on 15% and it will be a case of cherry picking high income applicants in any case.
From the banks p.o.v. if the market takes a slight downturn, their exposure would be amplified in your case, leverage works both ways as they found out a few years ago!

Nope, not in NE

Villa05

El_Dangeroso wrote: »

I know there's a current crisis with social housing but maybe we don't need to go back to the level we had when we could have been reasonably classed as a third world country.

We probably need more if high house prices are maintained as is current policy. The majority earn below the average wage. This coupled with the the CB rules means far less owner occupiers and more people that can't afford market rents

Bob24

Villa05 wrote: »

This coupled with the the CB rules means far less owner occupiers and more people that can't afford market rents

In a normal country this would lead to price reductions thought ...

The_Conductor

Bob24 wrote: »

In a normal country this would lead to price reductions thought ...

In a normal country- developers wouldn't consider 2 bed apartments in Portlaoise costing north of 250k 'normal' and refuse to build for less than this.........

The whole market is hopelessly screwed up.

There is a group of potential buyers with approval in principle who could be in the market until early summer under the old rules but will be 'locked out' after that. A colleague of mine in this situation went sale agreed this week even though he's not thrilled with what he's buying.

His rationale is that having 'use it or lose it' approval is a precarious situation so he set himself Easter as a target to buy 'something/anything'. Leaving it run into the last two or three months is just too risky. He was trying to buy all last year and lost a few bidding wars. If that were to happen again or even if there just wasn't anything suitable to bid on, he'd be bunched for a few years.

He's now reluctantly 'sale agreed' and wondering whether to follow through or take his chances. Hard to give advice on this dilemma. The downside of this is that you're only a FTB once and if he buys something just to 'get on the ladder' the rungs might appear more widely spaced when he decided to move up.

quadrifoglio verde

[Deleted User] wrote: »

There is a group of potential buyers with approval in principle who could be in the market until early summer under the old rules but will be 'locked out' after that. A colleague of mine in this situation went sale agreed this week even though he's not thrilled with what he's buying.

His rationale is that having 'use it or lose it' approval is a precarious situation so he set himself Easter as a target to buy 'something/anything'. Leaving it run into the last two or three months is just too risky. He was trying to buy all last year and lost a few bidding wars. If that were to happen again or even if there just wasn't anything suitable to bid on, he'd be bunched for a few years.

He's now reluctantly 'sale agreed' and wondering whether to follow through or take his chances. Hard to give advice on this dilemma. The downside of this is that you're only a FTB once and if he buys something just to 'get on the ladder' the rungs might appear more widely spaced when he decided to move up.

Take out a mortgage on a home I don't want to live in...thanks but no thanks

Michael D Not Higgins

Deleted User wrote: »

There is a group of potential buyers with approval in principle who could be in the market until early summer under the old rules but will be 'locked out' after that. A colleague of mine in this situation went sale agreed this week even though he's not thrilled with what he's buying.

His rationale is that having 'use it or lose it' approval is a precarious situation so he set himself Easter as a target to buy 'something/anything'. Leaving it run into the last two or three months is just too risky. He was trying to buy all last year and lost a few bidding wars. If that were to happen again or even if there just wasn't anything suitable to bid on, he'd be bunched for a few years.

He's now reluctantly 'sale agreed' and wondering whether to follow through or take his chances. Hard to give advice on this dilemma. The downside of this is that you're only a FTB once and if he buys something just to 'get on the ladder' the rungs might appear more widely spaced when he decided to move up.

This is part of the reason the central bank issued instructions to not do this kind of thing. It creates panic buying that circumvents the regulations. People can then end up in a situation where they've bought just because, like your colleague, or they end up taking a mortgage that's too high on LTV or LTI or both.

This engenders the same mentality as the spiralling property prices. "Oh, better get on the ladder before you're priced out of the market!"

I agree, it's not ideal. I'm also house-hunting myself but don't think I'll be badly affected by the new rules. From a selfish point of view, I worry about a short-term rush to buy - although we haven't really seen much evidence of it in the period since the measures were announced.

I'd also be annoyed if people are bidding up properties only to find that they can't actually come up with the funds.

Anecdote (have a pinch of salt at the ready): I'm viewing a house on Saturday which came to the market last summer. Went sale agreed at 5k over the asking in the autumn. Two months later, back on the market as the 'winning' bidder couldn't come up with the funds. I said I'd view it if there was scope for a much lower price - I genuinely thought it was OTT; I'm not just being mean. But the agent said he had others who had bid close to asking so he was confident it would sell.

Two more months passed and it disappeared from Daft/MyHome. I presumed it had sold. Then this week it reappeared with a new agent, 25k off the asking price. Where were the people who had bid it up beyond the asking?

A similar-ish house which would have been snapped up last spring has been sitting on the market for a two months and the only offer is 49k below asking.

It would suit me to think this but the market feels very different to this time last year.

seamus

Deleted User wrote: »

I'd also be annoyed if people are bidding up properties only to find that they can't actually come up with the funds.

I imagine one of the big problems is that people are bidding based on what one of the banks' online Approval in Princple forms told them they could borrow.

Delighted that the bank will "give" them €500k, the go about pushing the price of a €420k house up to €440k because they love it.

Then they go to the bank all excited and get a bit of a shock when they have to hand over 500 pages of documentation and the bank comes back telling them they can only afford €320k at most because they've got creche fees for 3 kids, 2 outstanding car loans and regular charges against their credit card from betfair.

Anecdotally I too have heard of plenty of instances of people being outbid, only for the agent to come back to them 4 weeks later saying that the original sale fell through.

Bob24

seamus wrote: »

Anecdotally I too have heard of plenty of instances of people being outbid, only for the agent to come back to them 4 weeks later saying that the original sale fell through.

I have been bidding on a few places where I pulled out because people were going crazy with their offers, and I was wondering what to do if an agent was to call me and say that.

Given the fact that you were bidding against unreliable competition, would you still offer what was your highest bid or come up with a lower offer?

seamus

Bob24 wrote: »

Given the fact that you were bidding against unreliable competition, would you still offer what was your highest bid or come up with a lower offer?

No no no, you start again.

I have also heard of that - agents coming back and telling people that their "last offer" was accepted.

Nope. If a buyer has dropped out, you start again, because time has moved on. If there is no other buyer to compete against, why would you pay more than you want to?

Villa05

Bob24 wrote: »

In a normal country this would lead to price reductions thought ...

The evidence from the banking inquiry yesterday coupled with the mass opposition to these cb rules shoW's how abnormal Ireland is

Bob24

Villa05 wrote: »

The evidence from the banking inquiry yesterday coupled with the mass opposition to these cb rules shoW's how abnormal Ireland is

Well yes I couldn't agree more :-)

What I meant is I am not sure building more social housing because the residential property market is distorted by various vested interests is the right answer (at last not the right long term one).

But then again, people are allowed to like their country and find it normal the way it is :-D

seamus

Villa05 wrote: »

The evidence from the banking inquiry yesterday coupled with the mass opposition to these cb rules shoW's how abnormal Ireland is

I was chatting to someone about this property last night. On the face of it, decent family home on a large site, massively potential.
But a disastrous BER, which indicates at the bare minimum you would need to completely rip out everything - kitchen, wardrobes, bathrooms fittings - insulate the walls and the attic, and replace the plumbing and the boiler before next winter. You're talking the guts of €50k, and that's before you even think about extending.

In any "normal" market, this would go for a song - in this case €250k - €300k - to reflect the fact that it's not a walk-in family home. It's a project/money pit.

But in the Irish market, such things are minor inconveniences, which only knock 10% off the asking price.
And in the boom years such properties were often more valuable because it was a blank slate for you to live your dream of being an interior decorator.

farrerg

The_Conductor wrote: »

In a normal country- developers wouldn't consider 2 bed apartments in Portlaoise costing north of 250k 'normal' and refuse to build for less than this.........

The whole market is hopelessly screwed up.

Interesting to see Goodbodys predicting price growth of 7% in 2015 and 5% in 2016, they must think lack of supply will see prices continue to increase, albeit much more modestly, despite the impact of the new rules, esp in Dublin.

The price drops and properties re-appearing for sale mentioned here seem to go against that but I wonder is that just people trying to get their heads around the impact of the changes.
Speaking to friends who are looking to buy, they are all torn between wanted to purchase, and a worry about not being able to borrow enough if they leave it till the new rules are fully in, and a fear that if they do, they'll pay over the odds and prices will fall at the end of the year / next year

seamus

farrerg wrote: »

Speaking to friends who are looking to buy, they are all torn between wanted to purchase, and a worry about not being able to borrow enough if they leave it till the new rules are fully in, and a fear that if they do, they'll pay over the odds and prices will fall at the end of the year / next year

I'm one of these people. My primary concern is not so much that I won't eventually be able to afford the new rules if I end up in that scenario - 2/3 years saving and I'll have the other 10%.
It's the fact that I don't want to rent a property with my family. Not least from the "Oh no, you can't hang a picture" nonsense, but also from the lack of security of tenure and the fact that renting will massively curtail the amount of saving I can do. Renting is 50% more expensive than a mortgage on properties where I'm looking.

Im not concerned about paying slightly over the odds if I can get a property that will suit our needs for the next 20 years if needs be. If prices then dip, we're unaffected. To us, paying slightly over the odds seems to be the lesser of two evils, when the other evil is paying a huge rent and feeling restricted in what we can do in our own home.

MayBea

Deleted User wrote: »

Anecdote (have a pinch of salt at the ready): I'm viewing a house on Saturday which came to the market last summer. Went sale agreed at 5k over the asking in the autumn. Two months later, back on the market as the 'winning' bidder couldn't come up with the funds.

With all the uncertainty around new CB rules and existing AIPs we may see more properties back on the market within the next 3-4 months.

TheDriver

seeing it already, stuff which was for sale for ages, taken off the market and back on again at a much higher price........

dr.fuzzenstein

TheDriver wrote: »

seeing it already, stuff which was for sale for ages, taken off the market and back on again at a much higher price........

Mission accomplished then, we're not happy in Ireland until we have the most expensive everything, it's a point of pride. We lost that for a few years, but house prices, rents, medicine, legal costs, food, taxes, cars, in short anything one might need is at least as expensive as Sweden. We get half the Scandinavian model right, the bit with providing services to people, we haven't quite worked out yet.
Well, we somehow have to make a buck, because how else are we going to get by by having Apple pay us €2 million on profits that exceed the entire Irish economy? If screwing the average Joe was an Olympic sport, Ireland would win every time without fail.
Ireland is a country geared at people with money, everyone else can fcuk off, we don't care if you end up in the gutter. Ireland will never be the Switzerland more like Swaziland.

gaius c

TheDriver wrote: »

seeing it already, stuff which was for sale for ages, taken off the market and back on again at a much higher price........

It won't last long. Viewings are actually quite busy but only if places are priced right. After a few months of no viewings, the pin will drop and so will the asking price.

seamus wrote: »

I was chatting to someone about this property last night. On the face of it, decent family home on a large site, massively potential.
But a disastrous BER, which indicates at the bare minimum you would need to completely rip out everything - kitchen, wardrobes, bathrooms fittings - insulate the walls and the attic, and replace the plumbing and the boiler before next winter. You're talking the guts of €50k, and that's before you even think about extending.

In any "normal" market, this would go for a song - in this case €250k - €300k - to reflect the fact that it's not a walk-in family home. It's a project/money pit.

But in the Irish market, such things are minor inconveniences, which only knock 10% off the asking price.
And in the boom years such properties were often more valuable because it was a blank slate for you to live your dream of being an interior decorator.

That's an excellent point. The quality of stock on the market is for the most part, execrable. Viewed one a few weeks ago and the heating has been off since October and it showed!

TheDriver

TheDriver wrote: »

seeing it already, stuff which was for sale for ages, taken off the market and back on again at a much higher price........

Higher price? I'm seeing the opposite.

Why, out of interest, would someone increase the price if it didn't sell?

PRAF

The_Conductor wrote: »

In a normal country- developers wouldn't consider 2 bed apartments in Portlaoise costing north of 250k 'normal' and refuse to build for less than this.........

The whole market is hopelessly screwed up.

They might if there was appropriate taxation over the hoarding of development land and also a properly enforced 'user it or lose it' style approach to planning permission.

Of course, there should also be a look at development costs and a strategy employed to bring these back closer to european norms

BoatMad

I was chatting to someone about this property last night. On the face of it, decent family home on a large site, massively potential.
But a disastrous BER, which indicates at the bare minimum you would need to completely rip out everything - kitchen, wardrobes, bathrooms fittings - insulate the walls and the attic, and replace the plumbing and the boiler before next winter. You're talking the guts of €50k, and that's before you even think about extending.

In any "normal" market, this would go for a song - in this case €250k - €300k - to reflect the fact that it's not a walk-in family home. It's a project/money pit.

As an aside, A low BER , for the most part means you will play more to heat the house to an acceptable level and also the thermal store effect will be low. However, simply because the BER is low, doesent mean you have to spend 50K, merely perhaps add 25% to the heating costs, so lets say its goes from 2K a year heating to 2.5K.. Most " green " initiatives never make any economic sense as their returns take years and years . ( i.e. the Return on Capital invested is lubricious) . Thats why the price of the house isn't really affected

Bob24

BoatMad wrote: »

Aowever, simply because the BER is low, doesent mean you have to spend 50K, merely perhaps add 25% to the heating costs, so lets say its goes from 2K a year heating to 2.5K..

Depends which rating you are comparing to which. Sure if you only jump one rating you are talking 25% change, but if you are spending serious money you would expect going up at least 4 or 5 notches.

If I read the figure below correctly, go from E1 to B1 and you will need 4 times less energy (and money) to heat your house at the same temperatures.

BoatMad

Bob24 wrote: »

Depends which rating you are comparing to which. Sure if you only jumping one rating you are talking 25% change.

But if I read the figure below correctly, go from E1 to B1 and you will need 4 times less energy (and money) to heat your house at the same temperatures.

I don't think it works out like that, BER indicates the Kwh,per m2 per year. But in practice quadrupling the KWh requirement in itself may not cause a fourfold increase inc costs.

Bob24

BoatMad wrote: »

But in practice quadrupling the KWh requirement in itself may not cause a fourfold increase inc costs.

Well, aside from a (minimal) standing charge energy providers are charging a rate per kwh used. Someone might confirm or not, but I am not aware of flat fees or reduced prices for high usage, so I think the cost is pretty much proportional to the number of kwh used.

I think what usually happens is that people are not seeing such differences because when the rating is too low they are lowering their expectations and acceping to live in a colder house (with or without realising it).

BoatMad

Bob24 wrote: »

Well, aside from a (minimal) standing charge energy providers are charging a rate per kwh used. Someone might confirm or not, but I am not aware of flat fees or reduced prices for high usage, so I think the cost is pretty much proportional to the number of kwh used.

what I mean is , Ive moved myself from a E1 to a C1 house. bills have fallen, but nothing in proportion to the suggested BER ratings. I suspect the reverse applies

seamus

BoatMad wrote: »

As an aside, A low BER , for the most part means you will play more to heat the house to an acceptable level and also the thermal store effect will be low. However, simply because the BER is low, doesent mean you have to spend 50K, merely perhaps add 25% to the heating costs, so lets say its goes from 2K a year heating to 2.5K.. Most " green " initiatives never make any economic sense as their returns take years and years . ( i.e. the Return on Capital invested is lubricious) . Thats why the price of the house isn't really affected

To be fair, a "G" rated BER as this property has, isn't a tiny jump in heating costs. You're potentially looking at the guts of €4k a year to heat a house of this size.
I agree that at the higher end (B3+) where you start looking at installing solar panels on the roof and such, then you get a diminishing return on investment.

But in this case I'd wager it's uninsulated cavity block and nothing's been done since the house was built at some point before 1978. So at the bare minimum you'd need to insulate the cavity block, tear out all of the plasterboard (and all fixtures and fitting with it), dry line it and replace it. While you're in there you may as well rewire and replumb, fit a new kitchen and wardrobes (because you've already removed them) and a new boiler.

And that's just enough so that you're not running the heating at full blast from October to March.

Michael D Not Higgins

BoatMad wrote: »

what I mean is , Ive moved myself from a E1 to a C1 house. bills have fallen, but nothing in proportion to the suggested BER ratings. I suspect the reverse applies

The fact that BER ratings are nearly entirely qualitative means they cannot correlate to an actual amount of saving. The difference between two levels could be the depth of attic insulation and have negligible difference to bills.

BoatMad

seamus wrote: »

To be fair, a "G" rated BER as this property has, isn't a tiny jump in heating costs. You're potentially looking at the guts of €4k a year to heat a house of this size.
I agree that at the higher end (B3+) where you start looking at installing solar panels on the roof and such, then you get a diminishing return on investment.

But in this case I'd wager it's uninsulated cavity block and nothing's been done since the house was built at some point before 1978. So at the bare minimum you'd need to insulate the cavity block, tear out all of the plasterboard (and all fixtures and fitting with it), dry line it and replace it. While you're in there you may as well rewire and replumb, fit a new kitchen and wardrobes (because you've already removed them) and a new boiler.

And that's just enough so that you're not running the heating at full blast from October to March.

I lived in an 1800 sq detached , with E rating, cost about 1500 euros in natural gas to heat per annum. ( average over 10 years )

I now live in a similar sized C1, Id say costs have fallen by about 20%, i.e. 300 euros. Hence taking say a 10 year return on savings, that would justify spending 3K euros on insulation. wouldn't go very far at all.

Getting your house insulated is good engineering , thats for sure, however it was not and never been good economics, no matter what the pundits try to convince you off.