Central Bank to limit amount banks lend for home purchase

Dubh Geannain

The Spider wrote: »

Ok, not getting involved in this because it's going to either get the thread closed or drag it into the gutter.

There is a huge demand for property today versus 2010 anyone can see that.

Must remember not to feed those trolls.:pac:

Less of the inexactitudes and you should be okay.

by the seaside

The Spider wrote: »

Really? How is it false? People want to be in Negative Equity is that your argument?

Someone buys a house and hopes prices drop? All the discussion here about the fear of buying at the top, come on.

I bought a house a few years ago. The value has since gone up. I would now like to but a house that would cost 25% more than the one I now own. If the value of my house and the one I want to buy went down by 15%, it would be more affordable for me, and I would want that. I wouldn't want to be in Negative Equity but I would like to see somewhat cheaper property prices.

Victor

The Spider wrote: »

Ok, not getting involved in this because it's going to either get the thread closed or drag it into the gutter.

There is a huge demand for property today versus 2010 anyone can see that.

Must remember not to feed those trolls.:pac:

If you have a problem with a post, report it. Do not accuse people of being trolls.

Moderator

Ray Palmer

Dubh Geannain wrote: »

This is only relevant if they are intending on selling it on in their lifetime. Most people (read non-investors) buy a house as a home and shouldn't care less what it is worth at any given instance. Unless of course you're referring to the smugness factor that people love to know how wealthy they are on paper".


If you count me as anyone. I couldn't give a fiddlers what the house is worth further down the road. Once I have affordable shelter and I can afford a decent standard of living to boot after mortgage repayments. Why should I? Unless I'm trying to climb up the fabled property ladder.


Higher prices => Less disposable income. Unless wage inflation outstrips house price inflation.

People need to man up if they make bad decisions that could affect their future financial security. This is the exact reason why I haven't bought anything.

If you take a second out of your personal argument on this you might actually realise what is being said. Your own beliefs about what you feel or what you think people should feel doesn't matter. People in negative equity feel insecure about spending money so won't spend money. They in particular won't invest money in their property which effects the construction industry and other auxiliary trades and businesses.
What you consider "manning up" actually means people constricting their spending to live with their financial choices. It also means investors will not invest money in rental properties to improve them and maintaining them on lower budget.
While you stand on the side lines of buying property judging everything else I would hazard a guess you believe rent is too high and think strict rent controls should be brought in?
Personally I think the big issue is people never considered that the high home ownership rate in Ireland was inevitable going to drop as the country's economic and social profile changed. The profile of what people can buy is also something I expected to change along with these things. 3 bed semis are no longer in the reach of somebody on the national average wage in Dublin, anybody surprised at this must have missed all the signs. Give it another 20-30 years and the people who go cheap ex council house will be gone and the families will have cashed in with the areas becoming gentrified. Some of the large family homes will also be split and sold as separate dwellings.
All of this can be seen in other countries and there isn't much that can be done to stop this. Wishing or telling people what it should be won't change the march of change.
I get why people aren't happy but it won't really change things

The Spider

Ray Palmer wrote: »

If you take a second out of your personal argument on this you might actually realise what is being said. Your own beliefs about what you feel or what you think people should feel doesn't matter. People in negative equity feel insecure about spending money so won't spend money. They in particular won't invest money in their property which effects the construction industry and other auxiliary trades and businesses.
What you consider "manning up" actually means people constricting their spending to live with their financial choices. It also means investors will not invest money in rental properties to improve them and maintaining them on lower budget.
While you stand on the side lines of buying property judging everything else I would hazard a guess you believe rent is too high and think strict rent controls should be brought in?
Personally I think the big issue is people never considered that the high home ownership rate in Ireland was inevitable going to drop as the country's economic and social profile changed. The profile of what people can buy is also something I expected to change along with these things. 3 bed semis are no longer in the reach of somebody on the national average wage in Dublin, anybody surprised at this must have missed all the signs. Give it another 20-30 years and the people who go cheap ex council house will be gone and the families will have cashed in with the areas becoming gentrified. Some of the large family homes will also be split and sold as separate dwellings.
All of this can be seen in other countries and there isn't much that can be done to stop this. Wishing or telling people what it should be won't change the march of change.
I get why people aren't happy but it won't really change things

I think you've put it way better than I did, that was the point I was trying to make.

Dubh Geannain

Ray Palmer wrote: »

If you take a second out of your personal argument on this you might actually realise what is being said. Your own beliefs about what you feel or what you think people should feel doesn't matter. People in negative equity feel insecure about spending money so won't spend money. They in particular won't invest money in their property which effects the construction industry and other auxiliary trades and businesses.

If they can't afford to keep their rentals up to a livable standard then they should be repossessed and bought by a professional investor who knows what they are getting themselves into.

I understand the mental anguish of negative equity all too well and have many friends in the same situation. Consider the converse of those priced out of the market. They have to scrimp and save to attain an ever unreachable purchase price. They are certainly not spending superfluously in the wider economy.

What you consider "manning up" actually means people constricting their spending to live with their financial choices. It also means investors will not invest money in rental properties to improve them and maintaining them on lower budget.

There is nothing wrong with that. Those who make reckless decisions and don't suffer at all are doomed to repeat the same mistakes. (I'm not calling for repossessions of peoples homes by the way).

While you stand on the side lines of buying property judging everything else I would hazard a guess you believe rent is too high and think strict rent controls should be brought in?

You are wrong with that assumption unfortunately.

While we're making assumptions though. If it's okay, I'll assume you have Neo Liberal opinions and think the free market should rule all. Until it falls asunder and bailouts are requried, using public money of course :pac:

Also, I wouldn't quite say I'm on the sidelines. I rent and am married with two kids. I have much more uncertainty hanging over me with regards accommodation than someone who is in Negative equity but can afford their repayments. I have also tried buying in the last couple of years but when people started bidding in stupid multiples again on the houses I was interested in, I stepped back.

Personally I think the big issue is people never considered that the high home ownership rate in Ireland was inevitable going to drop as the country's economic and social profile changed. The profile of what people can buy is also something I expected to change along with these things. 3 bed semis are no longer in the reach of somebody on the national average wage in Dublin, anybody surprised at this must have missed all the signs. Give it another 20-30 years and the people who go cheap ex council house will be gone and the families will have cashed in with the areas becoming gentrified. Some of the large family homes will also be split and sold as separate dwellings.

You're half right here. And renting would be Peachy if the quality of our rental market was a little more mature. I don't think I need to expand on this. I'm sure you know what I mean.

Landlords are necessary and serve a purpose but would you like to see a return to the Landlord/Peasant class of yesteryear. Unfortunately where the state has failed is it's expectancy that the private market would facilitate those who you mention will never afford a home. The state needs to get back building houses for those that can't house themselves and not leave them at the mercy of the private market.

All of this can be seen in other countries and there isn't much that can be done to stop this. Wishing or telling people what it should be won't change the march of change.
I get why people aren't happy but it won't really change things

Cheap, affordable housing can be provided but unfortunately cognitive biases are very much blinding people to the obvious.

Ray Palmer

Dubh Geannain wrote: »

If they can't afford to keep their rentals up to a livable standard then they should be repossessed and bought by a professional investor who knows what they are getting themselves into.

I never said anything about rentals not being to standard. A matter of quality improvements to an overall improvement of rental standards is unlikely if there is no return on that investment. Basic economics.

Dubh Geannain wrote: »

I understand the mental anguish of negative equity all too well and have many friends in the same situation. Consider the converse of those priced out of the market. They have to scrimp and save to attain an ever unreachable purchase price. They are certainly not spending superfluously in the wider economy.

So what if you understand the mental anguish I am talking economics

Dubh Geannain wrote: »

There is nothing wrong with that. Those who make reckless decisions and don't suffer at all are doomed to repeat the same mistakes. (I'm not calling for repossessions of peoples homes by the way).

There is something economically wrong with that. You wanted people to "man up" and "suffer". OK for landlords though, interesting logic.

Dubh Geannain wrote: »

You are wrong with that assumption unfortunately.

While we're making assumptions though. If it's okay, I'll assume you have Neo Liberal opinions and think the free market should rule all. Until it falls asunder and bailouts are requried, using public money of course :pac:

There was no assumption there was a question. I also did not assume to say what the outcome would be if that was what you believed in. As for what you have stated now, that is not what happened. A poorly regulated financial authority was the problem not a free property market.

Dubh Geannain wrote: »

Also, I wouldn't quite say I'm on the sidelines. I rent and am married with two kids. I have much more uncertainty hanging over me with regards accommodation than someone who is in Negative equity but can afford their repayments. I have also tried buying in the last couple of years but when people started bidding in stupid multiples again on the houses I was interested in, I stepped back.

To the sideline shouting advice on everything hoping it will be in a situation you like.

Dubh Geannain wrote: »

You're half right here. And renting would be Peachy if the quality of our rental market was a little more mature. I don't think I need to expand on this. I'm sure you know what I mean.

No idea what you mean because you seem to be suggesting rental is something new to the country.

Dubh Geannain wrote: »

Landlords are necessary and serve a purpose but would you like to see a return to the Landlord/Peasant class of yesteryear. Unfortunately where the state has failed is it's expectancy that the private market would facilitate those who you mention will never afford a home. The state needs to get back building houses for those that can't house themselves and not leave them at the mercy of the private market.


Cheap, affordable housing can be provided but unfortunately cognitive biases are very much blinding people to the obvious.

What you are suggesting was tried and failed. It will not be repeated and we still live with the consequences to this day. The areas of the worst social issues is a result of this failed method. The problem with your idea that this is a solution is it requires ignoring the past and the inevitable of changes already in motion. It sounds like wishing for something you already know isn't going happen. Not sure what the point is or if you are trying to even make one. All the points seem to be suggesting you want changes to suit yourself don't care about the economics or the reality.

Dubh Geannain

Ray Palmer wrote: »

I never said anything about rentals not being to standard. A matter of quality improvements to an overall improvement of rental standards is unlikely if there is no return on that investment. Basic economics.

People can do what they want with their investments once they're up to a livable standard. They shouldn't have to improve them for the sake of the economy.

So what you understand the mental anguish I am talking economics

There is something economically wrong with that. You wanted people to "man up" and "suffer". OK for landlords though, interesting logic.

I think you'll find social issues and not just economic play a pretty big role when it comes to housing the great unwashed. At least it should in a proper functioning market.

There was no assumption there was a question. I also did not assume to say what the outcome would be if that was what you believed in. As for what you have stated now, that is not what happened. A poorly regulated financial authority was the problem not a free property market.

Hazarding a guess whether you qualify it with a question mark or not, can be construed as assuming. But I won't argue semantics with you.
For a great savant of economics it is a very myopic viewpoint to lay the blame firmly with the regulator. I suppose you can't blame savvy investors who can't do basic arithmetic anyway.

To the sideline shouting advice on everything hoping it will be in a situation you like.

That's just prejudice against a humble renter. I am most certainly not on the sideline and pay rent into this dysfunctional market.

No idea what you mean because you seem to be suggesting rental is something new to the country.

Yea that's exactly what I was suggesting. [/sarcasm]

What you are suggesting was tried and failed. It will not be repeated and we still live with the consequences to this day. The areas of the worst social issues is a result of this failed method. The problem with your idea that this is a solution is it requires ignoring the past and the inevitable of changes already in motion. It sounds like wishing for something you already know isn't going happen. Not sure what the point is or if you are trying to even make one. All the points seem to be suggesting you want changes to suit yourself don't care about the economics or the reality.

Was it not yourself that used the phrase gentrification? This has happened in many ex working class areas before and will again. We've had ghettoisation through the private market too. I'm not claiming to have all the solutions but can at least see when something is FUBAR.

You don't seem to be suggesting any solutions. Are you happy with the current state of the property market? Double % swings up and down are okay. It's more volatile than the stock market. I suppose your economic model will fix it all.

The Spider

Why is it that rising consumer sentiment is in line with rising property prices?
Why do more households predict that they'll be better off financially at the end of 2015 then at any time since 2007?

http://www.irishtimes.com/business/economy/rising-property-prices-and-low-to-negative-inflation-bolster-confidence-1.2092511

Looks like rising prices, and economic performance are actually tied together, who knew?

MysticalRain

The Spider wrote: »

Why is it that rising consumer sentiment is in line with rising property prices?
Why do more households predict that they'll be better off financially at the end of 2015 then at any time since 2007?

http://www.irishtimes.com/business/economy/rising-property-prices-and-low-to-negative-inflation-bolster-confidence-1.2092511

Looks like rising prices, and economic performance are actually tied together, who knew?

Correlation is not causation. The link between the two is not defined in the article.

Funny how one vested interest in property prices rising (the Irish Times) quotes a survey commissioned by another VI (KBC bank) that endorses the view that inflated property prices are good for the economy.

MysticalRain

See text copied and pasted below from previous arguments with the Spider (cause I am sick of typing the same old ****e over and over again)

Spider argument 1: Rising house prices is good for the economy
The economy is picking up in spite of rising house prices, not because of it. If someone is paying 70,000 more for a family home this year, than they would have last year, they obviously have far less money to spend in the wider economy now. Not to mention factors like property prices eroding our economic competitiveness, and driving businesses to the wall the wall with rising rents. A minority of people might gain, but most of us lose out if prices rise.



Spider argument #2: But I feel rich, therefore I must be richer, correct?
Just because you "feel rich", it doesn't make you rich. The idea that we can pretend to be rich investing in a property pyramid scheme with massive amounts of money borrowed from German and French banks is ludicrous. It didn't work the last time round, and it won't work the next time round either.

If falling house prices mean that you sell your house for less, then conversely, you pay a lot less for the new house you buy. The added benefit to the wider economy is that both you and the person buying your old house now have more money to spend in the real economy.



Spider argument #3: The housing market is a “free market”
The housing market is not a “free market” if there is government intervention preventing capitalism from taking it’s natural course i.e. repossessing houses of people can’t/won’t pay the mortgage and ultimately transferring the cost to FTB’s through increased interest rates.

The government does intervene in the market in the format of tax breaks, subsidies, rent allowance, enforcing standards, and of course NAMA as you mentioned. Basically, there is more to the definition of a "free market" than the government explicitly setting prices on something. i.e. if the government is playing an active role in controlling supply and demand, it is not a free market by any stretch. A landlord may charge 2000 / month for what he thinks his property his worth, but it is the government which helps create the prevailing market conditions to enable him to do that e.g. NAMA holding on to a block of empty apartments next door and keeping them off the market for fear of driving down property prices.



Spider argument #4: everybody is a “Vested interest”
This is missing the point. The "average citizen" is more likely home buyer, not a seller/developer/investor who sells houses as assets to the highest bidder.

To use the Oil Sheik analogy: most people are consumers of fuel, not sellers. So only a small minority benefit from inflated prices.

I would define a "vested interest" as a minority within a society who enrich themselves at the expense of the wider society e.g. developers, bankers, politicians and various other such gombeens. So accusing the average citizen of this country of not wanting to be fleeced by such vested interests (any more so than they have been already) is a bit rich.



Spider argument #5: Builders won’t build houses if we don’t throw wads of cash at them
Builders are not some caricatures from an Ayn Rand novel where they will threaten go full John Galt and withdraw their services if they feel society isn't paying them enough.

The main blocker for builders at the moment is lack of credit and available land. If they refuse to work, it's either back to the dole queue or a one way trip to Australia or Canada.

The Spider

MysticalRain wrote: »

See text copied and pasted below from previous arguments with the Spider (cause I am sick of typing the same old ****e over and over again)

Spider argument 1: Rising house prices is good for the economy
The economy is picking up in spite of rising house prices, not because of it. If someone is paying 70,000 more for a family home this year, than they would have last year, they obviously have far less money to spend in the wider economy now. Not to mention factors like property prices eroding our economic competitiveness, and driving businesses to the wall the wall with rising rents. A minority of people might gain, but most of us lose out if prices rise.



Spider argument #2: But I feel rich, therefore I must be richer, correct?
Just because you "feel rich", it doesn't make you rich. The idea that we can pretend to be rich investing in a property pyramid scheme with massive amounts of money borrowed from German and French banks is ludicrous. It didn't work the last time round, and it won't work the next time round either.

If falling house prices mean that you sell your house for less, then conversely, you pay a lot less for the new house you buy. The added benefit to the wider economy is that both you and the person buying your old house now have more money to spend in the real economy.



Spider argument #3: The housing market is a “free market”
The housing market is not a “free market” if there is government intervention preventing capitalism from taking it’s natural course i.e. repossessing houses of people can’t/won’t pay the mortgage and ultimately transferring the cost to FTB’s through increased interest rates.

The government does intervene in the market in the format of tax breaks, subsidies, rent allowance, enforcing standards, and of course NAMA as you mentioned. Basically, there is more to the definition of a "free market" than the government explicitly setting prices on something. i.e. if the government is playing an active role in controlling supply and demand, it is not a free market by any stretch. A landlord may charge 2000 / month for what he thinks his property his worth, but it is the government which helps create the prevailing market conditions to enable him to do that e.g. NAMA holding on to a block of empty apartments next door and keeping them off the market for fear of driving down property prices.



Spider argument #4: everybody is a “Vested interest”
This is missing the point. The "average citizen" is more likely home buyer, not a seller/developer/investor who sells houses as assets to the highest bidder.

To use the Oil Sheik analogy: most people are consumers of fuel, not sellers. So only a small minority benefit from inflated prices.

I would define a "vested interest" as a minority within a society who enrich themselves at the expense of the wider society e.g. developers, bankers, politicians and various other such gombeens. So accusing the average citizen of this country of not wanting to be fleeced by such vested interests (any more so than they have been already) is a bit rich.



Spider argument #5: Builders won’t build houses if we don’t throw wads of cash at them
Builders are not some caricatures from an Ayn Rand novel where they will threaten go full John Galt and withdraw their services if they feel society isn't paying them enough.

The main blocker for builders at the moment is lack of credit and available land. If they refuse to work, it's either back to the dole queue or a one way trip to Australia or Canada.

On an iPad so can't do multi quote, I'll address your points in order.

1. Disagree the economy is improving and house prices are rising, with increased incomes. More jobs being created therefore more money in the system, and people are moving to better jobs etc. a couple that had one person at work now maybe has two, therefore increasing buying power.

2. All I can say here is Negative Equity, if you sell the house for less than the loan, then it doesn't make a difference what price the house you were going to buy is.

3. I've never said this, in fact if you go through old posts I pretty much said there'd never be repossessions in Ireland.

4. we'll have to disagree on the term vested interest, I stand by my opinion on this.

5. Plenty of builders, carpenters etc have already left for distant shores, I'd like to see some evidence that it's lack of credit preventing building, otherwise it's just conjecture and opinion, nothing wrong with that, but let's not pretend it's fact.

MysticalRain

1. Disagree the economy is improving and house prices are rising, with increased incomes there's' more jobs being created therefore more money in the system, and people are moving to better jobs etc. a couple that had one person at work now maybe has two, thanks to new jobs, therefore increasing buying power.

Not sure why you think this disproves my argument. We know the economy is rising. The economy would have been rising regardless of house prices, and a lot faster if rising rents and prices weren’t hammering businesses.

2. All I can say here is Negative Equity, if you sell the house for less than the loan, then it doesn't make a difference what price the house you were going to buy is.

NE is only effects a small ministry of people in the country who intend selling their house.

3. I've never said this, in fact if you go through old posts I pretty much said there'd never be repossessions in Ireland.

Which was of course completely wrong given the amount of repossessions flooding through the courts in the last few months (I happen to have purchased on myself)

4. we'll have to disagree on the term vested interest, I stand by my opinion on this.

Translation: I’ve run out of arguments and can’t actually back up my own opinion on this one.

5. Plenty of builders, carpenters etc have already left for distant shores, I'd like to see some evidence that it's lack of credit preventing building, otherwise it's just conjecture and opinion, nothing wrong with that, but let's not pretend it's fact.

If you require educating, then please allow me to help you. Let’s quote the ESRI and the head of the Construction Industry Federation for starters.

http://www.irishexaminer.com/business/strategic-investment-bank-mooted-265192.html

The ESRI identified the lack of credit available to property developers as one of the constraints on construction activity.

Head of the Construction Industry Federation, Tom Parlon, welcomed the findings of the ESRI report. “It’s positive that once more we are seeing the ESRI confirm that 25,000 houses need to be built in this country every year,” Mr Parlon said.

Ray Palmer

Dubh Geannain wrote: »

...
You don't seem to be suggesting any solutions. Are you happy with the current state of the property market? Double % swings up and down are okay. It's more volatile than the stock market. I suppose your economic model will fix it all.

I don't get why everything has to be so aggressively stated. Either way I haven't said a lot of what you seem to think I have so you seem to be misunderstanding and dragging in things that you assume I mean.

I find the points you are making incoherent and inconsistent.

Can you clarify some points
1) You want people to take responsibility for their financial decisions but don't want repossessions unless it is a landlord?
2) You want property prices to drop down and don't see a problem with negative equity in any financial way but you understand it cause human distress?
3) You want the rental market to mature but don't care what landlords do with their property once it meets minimum standards?
4) You don't want stricter rental controls but have an issue with rents prices going up double digits?
5) You think the government should build affordable housing for people but acknowledge it won't happen?
6) You are happy with social housing having negative social impact as it will eventually disappear due to gentrification*?


*Gentrification I mentioned doesn't happen in any short space of time. I suggested in 20-30 year on housing built in the the 50-60s which is up to 80 years to happen and possibly longer. It also will not happen in all these areas in that time frame which will remain social black spots for much longer and may never actually happen.
You also mention ghettoisation through the private market but I have no idea where you are talking about or how it was done by the private market. The only thing I can think of is the deterioration of inner city properties to slums after tax hikes made it more economical to move out. Want to elaborate?

Dubh Geannain

Ray Palmer wrote: »

I don't get why everything has to be so aggressively stated. Either way I haven't said a lot of what you seem to think I have so you seem to be misunderstanding and dragging in things that you assume I mean.

I find the points you are making incoherent and inconsistent.

Can you clarify some points
1) You want people to take responsibility for their financial decisions but don't want repossessions unless it is a landlord?
2) You want property prices to drop down and don't see a problem with negative equity in any financial way but you understand it cause human distress?
3) You want the rental market to mature but don't care what landlords do with their property once it meets minimum standards?
4) You don't want stricter rental controls but have an issue with rents prices going up double digits?
5) You think the government should build affordable housing for people but acknowledge it won't happen?
6) You are happy with social housing having negative social impact as it will eventually disappear due to gentrification*?


*Gentrification I mentioned doesn't happen in any short space of time. I suggested in 20-30 year on housing built in the the 50-60s which is up to 80 years to happen and possibly longer. It also will not happen in all these areas in that time frame which will remain social black spots for much longer and may never actually happen.
You also mention ghettoisation through the private market but I have no idea where you are talking about or how it was done by the private market. The only thing I can think of is the deterioration of inner city properties to slums after tax hikes made it more economical to move out. Want to elaborate?

1) Reposessions should happen. For landlords and private homeowners that can't come to a reasonable arrangement with their bank, or more pointedly refuse to engage with their lender. I don't want to see families out on the streets but eh current impasse needed to be addressed. Would you not agree? A rise in house prices does not make it any easier for someone in default to pay back their mortgage. It does however incentivise the bank to begin the reposession process.

2) I don't see a problem with negative equity. I see human distress sure. But there is no need to be distressed if you can afford the repayments and keep the roof over your head. I have explained this to my friends. Please tell me you can understand at least this?

3) Exactly. Basic standards are far from being met at the moment so lets take it ones step at a time before the landlords start painting their furniture with chalk paint. Longer term leases and a larger proportion unfurnished rentals (that are at least damp free) would be a sign of a maturing rental market. Do you disagree with this?

4) I was referring to house prices. But since you brought it up. Double % swings (up or down) in rental princes is not the sign of a healthy market either. Are you disagreeing with this too?

5) I don't acknowledge it won't happen and didn't say that. It will have to happen eventually. What are NAMA doing by the way? Oh, that's interesting http://www.irishtimes.com/news/politics/nama-to-provide-funding-for-social-housing-developments-1.1930023
This situation isn't ideal and needs to be more transparent.

6) You brought up gentrification. I merely pointed out that whether you have government intervention or not you will still have social blackspots. What you shouldn't have is housing shortages. Which is at the nub of the problems today.

How about you answer some questions yourself as this seems very one way:
1) What is your grand sweeping "economic" solution to the current dysfunctional market? Don't worry about the going into too much detail, as that seems to be a problem for you.
2) What is your stance on repossessions?
3) I'll ask you for the second time. Are you happen with the current volatility in the housing market? Both relating to house prices and rental prices.
4) What multiple of median incomes do you think is a fair media house price?
5) Do you think prices need to rise further?
6) Do you class a renter as someone who's opinion you value less? I would hold these same views, if I owned you see.
7) How do you propose a solution for the shortage of social housing?

Dubh Geannain

@ Ray Palmer:

Also, are you sticking by your assertion that the regulator was at fault for the whole mess? I'm afraid I don't think we've anything more to discuss if you believe that to be the case. We're obviously at different levels of understanding what happened.

I assume you mean the financial regulator by the way or more specifically a poorly regulated financial sector. And not the "regulator of the financial authority" as you state.

A poorly regulated financial authority was the problem not a free property market.

The Spider

And as I said would happen, people are now moving out of Dublin and buying in the commuter counties, I think I said in 2013 that the rises in SCD would spread to all of Dublin, I was ridiculed, well what's happened? I said that substitution effect would come into play and rises would begin in the commuter belt, well that's where we are now, and it's not done yet.

http://www.belfasttelegraph.co.uk/news/local-national/uk/homes-sell-in-weeks-in-republic-of-ireland-despite-44-price-hike-30976819.html

Villa05

The Spider wrote: »

And as I said would happen, people are now moving out of Dublin and buying in the commuter counties

I believe you also said high house prices were good for the economy. Can you tell me how repeating the same process that destroyed the economy is beneficial. In sane countries it is the definition of stupidity

The Spider

Villa05 wrote: »

I believe you also said high house prices were good for the economy. Can you tell me how repeating the same process that destroyed the economy is beneficial. In sane countries it is the definition of stupidity

I said rising property prices increase consumer sentiment, because people feel richer, if someone is no longer in negative equity they spend more in the economy as they don't feel a need to have a war chest in case of emergencies.

We all know where the economy was when house prices were dropping, in the toilet, the economy is improving rapidly, and house prices are rising, because more people are working and can afford to buy houses.

Why weren't people buying property in 2010/2011 there was plenty for sale at way below the present prices?

Is it because of economic uncertainty, people out of work and an unwillingness to commit to a mortgage in that climate.

Why suddenly has the interest in buying a house returned, is it to do with the fact that now people feel they can afford to buy a house, thanks to an improving economy? Is it because they no longer feel uncertain in their jobs?

jay0109

They may feel richer but they aren't as they have to put more into servicing their mortgages/rent....and thus have less to put into day to day spending. Hence, it's bad for the economy!

The Spider

jay0109 wrote: »

They may feel richer but they aren't as they have to put more into servicing their mortgages/rent....and thus have less to put into day to day spending. Hence, it's bad for the economy!

Applies to people who have yet to buy, or bought recently, but they are still in a better position than those who bought in 2006, however the rising economic tide means they have more money.

An example is someone who lost their job in a two income family in 2008, has now found a job meaning that family now has more income than they did in 2008, and have more money to spend.

You can argue good or bad till the cows come home, but the facts are consumer sentiment is tied to house prices. It's been shown time and time again.

johnp001

The Spider wrote: »

I said rising property prices increase consumer sentiment, because people feel richer, if someone is no longer in negative equity they spend more in the economy as they don't feel a need to have a war chest in case of emergencies.

We all know where the economy was when house prices were dropping, in the toilet, the economy is improving rapidly, and house prices are rising, because more people are working and can afford to buy houses.

Why weren't people buying property in 2010/2011 there was plenty for sale at way below the present prices?

Is it because of economic uncertainty, people out of work and an unwillingness to commit to a mortgage in that climate.

Why suddenly has the interest in buying a house returned, is it to do with the fact that now people feel they can afford to buy a house, thanks to an improving economy? Is it because they no longer feel uncertain in their jobs?

Just in relation to the prices in 2010/2011:
This article, http://www.irishexaminer.com/ireland/special-reportirish-property-sales-and-prices-acheived-in-2014-311395.html quoting PPR figures has some interesting information.
e.g. Median price for the country for 2014 is up 6% on 2013 but is lower than medians for the preceding years for which PPR records data, i.e. 2012,2011 and 2010
For Dublin median price is lower for 2014 than it was in 2010 (although higher than 2011,2012 and 2013)

The Spider

johnp001 wrote: »

Just in relation to the prices in 2010/2011:
This article, http://www.irishexaminer.com/ireland/special-reportirish-property-sales-and-prices-acheived-in-2014-311395.html quoting PPR figures has some interesting information.
e.g. Median price for the country for 2014 is up 6% on 2013 but is lower than medians for the preceding years for which PPR records data, i.e. 2012,2011 and 2010
For Dublin median price is lower for 2014 than it was in 2010 (although higher than 2011,2012 and 2013)

I get that, prices were still on the slide in 2010 and it's widely accepted the bottom was 2012, so prices still had a bit to drop in 2010, however is there any info on volume of sales in 2010 versus 2014?

The_Morrigan

Folks can I remind you that the topic at hand is the lending restrictions being imposed from the Central Bank.
Can we try stay on topic??

jay0109

Back on topic- why have the new rules not come into effect yet!!! It's 2 weeks on Thursday since the announcement was made

Bob24

jay0109 wrote: »

Back on topic- why have the new rules not come into effect yet!!! It's 2 weeks on Thursday since the announcement was made

I am also wondering.

In the FAQ they published with the announcement they said:

"When will the measures be introduced?
We expect the legislation to be laid before the Oireachtas in the coming
days"

Does anyone know if the legislation has indeed been submitted. And once it is, will there be an additional delay?

jay0109

This delay is allowing the banks to get a lot of AiP's out! A sop to the Govt for bringing in the new rules?

Bob24

jay0109 wrote: »

This delay is allowing the banks to get a lot of AiP's out! A sop to the Govt for bringing in the new rules?

Yeah I am sure mortgage approval teams in all the banks are pretty busy at the moment!

ec18

wasn't there a government proposed initiative that FTBs could get 95% mortgages backed by the Govt. Was that just a proposal? or did it come into effect?

ec18

ec18 wrote: »

wasn't there a government proposed initiative that FTBs could get 95% mortgages backed by the Govt. Was that just a proposal? or did it come into effect?

The idea of mortgage insurance was floated in the Govt's Construction 2020 strategy. As I understand it, one of the options was for FTBs to get insurance to cover, say, 10% of the mortgage. So they would need a 10% deposit with the other 10% covered by insurance. If you were only borrowing 50% LTV (or whatever) then you wouldn't need it anyway because if you default on the loan the bank probably actually makes a profit by selling you/their house.

Honohan said this kind of insurance would be a bad idea if it just moved risk around the system i.e. if the Irish govt were insuring mortgages given out by Irish banks who are either part-owned by the govt or otherwise guaranteed by the state. Equally, having an Irish insurance company insure Irish mortgages means that if there were a collapse all the risk would be carried by Irish institutions - which, worst case scenario, would need to be bailed out by Ireland.

This left open the idea of a private insurance policy offered by international insurers. Step forward Genworth with an immaculately timed report recommending insurance for buyers with high LTVs. They already offer this in Canada and elsewhere.

It wouldn't be cheap, by the way. FTBs with the least cash - i.e. those who take out high LTV mortgages - would have to pay insurance premiums for the privilege of taking on more debt.

As things stand, there is to be some kind of (Oireachtas Finance?) committee report on the matter but any company selling this kind of project would have to be regulated by the CB itself. My impression from Honohan's statements on this is that he doesn't particularly like mortgage insurance but, as a regulator, might not actually block it.

Short answer: nothing has happened yet but the idea is not dead.