Who is buying houses in Ireland?

bob90909

As someone who needs to move home for my family I've been paying attention to the Irish house Market recently. I just can't figure out who is buying houses. A family home in any reasonable area in Dublin is now running at half a million plus again!!!! The banks are not loaning and where they are it's at a 2 or 3 times multiple of salary.

Average salary rates are in the 40k range so if you are on, say 100 k, your doing pretty well for yourself and in the top 5-10% of earners. (And before the looney left and haters kick off I'm picking that number purely as an example). That is until the tax man sails in and takes 50%+. So here's the scenario, Someone on that salary takes home about 48k. After vat, household expenses and other expenses say they manage to save 30k for 3 years running. That's 90 k. + a huge mortgage to enslave yourself for 30years would get you to the 490k region. Your almost at the races with those maths.

If you are to believe the papers and media most of the population is broke, so either the scenario above is very rare or the Irish People are a hell of a lot wealthier than they are letting on!

So the question is : who is buying all these ridiculously priced houses?

Tigger

bob90909 wrote: »

As someone who needs to move home for my family I've been paying attention to the Irish house Market recently.
I just can't figure out who is buying houses. A family home in any reasonable area in Dublin is now running at half a million plus again!!!! The banks are not loaning and where they are it's at a 2 or 3 times multiple of salary. Average salary rates are in the 40k range so if you are on, say 100 k, your doing pretty well for yourself and in the top 5-10% of earners.
(And before the looney left and haters kick off I'm picking that number purely as an example) .
That is until the tax man sails in and takes 50%+
So here's the scenario,
Someone on that salary takes home about 48k. After vat, household expenses and other expenses say they manage to save 30k for 3 years running.
That's 90 k. + a huge mortgage to enslave yourself for 30years would get you to the 490k region.
Your almost at the races with those maths. If you are to believe the papers and media most of the population is broke, so either the scenario above is very rare or the Irish People are a hell of a lot wealthier than they are letting on!
So the question is : who is buying all these ridiculously priced houses?

If you eArn 100k you bring home closer to 60k

http://taxcalc.ie/budget-2014/?salary=100000&employment_status=1&marital_status=1&spouse-income=&spouse-employment_status=1&children=0&primary_carer=0&age=29&age-credit=0&medical-card=0&house_value=&know-cutoff=0&own-cutoff=&know-credits=0&own-credits=&pension=&pension_type=Percentage&avc=&avc_type=Percentage&company-car=0&original-market-value=&business-mileage=24135&running-cost=&employer-health-insurance=0&heath-insurance-contribution=&rent=0&tuition=&incapacitated-child=0&dependent-relative=0&dependent-relative-income=&widow-year-bereavement=0&widow-parent-bereaved=0&blind=0&blind-spouse=0&guide-dog=0&employ-carer=0&submit=Calculate&show-advanced=0

if you save 30k a year for deposit then you can pay 30k on a mortgage instead
So if you buy a 500k home it'll be paid for in 12-13 years or 9-10 if you have a 18% deposit
Seems clear to me that that is affordable the question is how do you earn 100k

Lu Tze

bob90909 wrote: »

As someone who needs to move home for my family I've been paying attention to the Irish house Market recently.
I just can't figure out who is buying houses. A family home in any reasonable area in Dublin is now running at half a million plus again!!!! The banks are not loaning and where they are it's at a 2 or 3 times multiple of salary. Average salary rates are in the 40k range so if you are on, say 100 k, your doing pretty well for yourself and in the top 5-10% of earners.
(And before the looney left and haters kick off I'm picking that number purely as an example) .
That is until the tax man sails in and takes 50%+
So here's the scenario,
Someone on that salary takes home about 48k. After vat, household expenses and other expenses say they manage to save 30k for 3 years running.
That's 90 k. + a huge mortgage to enslave yourself for 30years would get you to the 490k region.
Your almost at the races with those maths. If you are to believe the papers and media most of the population is broke, so either the scenario above is very rare or the Irish People are a hell of a lot wealthier than they are letting on!
So the question is : who is buying all these ridiculously priced houses?

You do realise that the higher rate doesnt apply to all your income? Your looking around 60k take home.

It all depends on the size of house, plenty of 2 beds across south county dublin for 300k.

moxin

bob90909 wrote: »

A family home in any reasonable area in Dublin is now running at half a million plus again!!!!

Plenty of nice houses in reasonable areas in Dublin priced from 200k-499k.

The_Conductor

A lot of 'family homes' in Dublin are being bought by people who bought apartments in the early noughties and who are finally financially able to sell their pre-existing property to buy a family home.

Investors have pretty much left the market altogether- even with rent levels where they are, returns are insufficient from an investment perspective to justify the prices being sought.

First time buyers- are active in the lower end of the market- especially apartments- not family homes.

There is pent-up demand for 'family homes' from the generation who had it drummed into them- that an apartment was a 'starter home' that they would trade up from. Hitherto- with depressed property prices- they were unable to justify selling up to move- but the fulcrum has tipped firmly in their favour.

First time buyers who expect to buy 'family homes' in the Dublin area- are chasing the property category that everyone wants- and that many people in their 30s who forewent purchasing- or who purchased apartments previously- are now in a firm financial standing, and willing to do what it takes to purchase their chosen properties.

Dublin hasn't been building 'family homes'- and indeed, we need a sea change in how we view high density living arrangements. We need proper facilities and amenities in high density units- this could include children's playgrounds, swimming pools, gyms, new bus services etc etc etc Also- 20 stories- is not high- we *need* to build up- we are incapable of servicing a low density sprawl- which is pretty much what the country is- a mad area of low density sprawl- where everyone believes they have the right to every facility and amenity in their immediate vicinities..........

We need a sea change in opinions- and this 'family home' frame of mind- has to go........

hfallada

OP you have to remember, the recession only affected some people. Yes everyone get higher taxes, but a lot of middle and upper-middle class families werent affected by the recession to severly. They have benefited with the lower prices of most goods(building work is a lot cheaper now).Their mortgages were probably tracker, meaning they are probably paying an extremely small proportion of what they used to spend on their mortgage. Or if they were renting, their rent is still probably about a third less than the boom and for a while their rent was probably 40% cheaper than renting in 2007.

Meaning they were able to save huge amount of money. If you and your other half were able to save €3,000 a month for the last 7 years. You would have €250,000 in savings for a mortgages. And if you both had decent jobs(which people in suburbs of Dublin generally have), its not hard to save €3,000 a month.

Its weird that Ireland doesnt have more foreign investors, buying single properties like Irish people used to buy into Germany. Irish property has a decent return, its a stable country(thats why Asians invest in the US). But I suppose the fact that Irish letting laws are so basic, its quite risky( eg PRTB is too slow to evict a non-paying tenant). Where as its extremely quick to evict a non-paying tenant in the US

Gasherbraun

hfallada wrote: »

Its weird that Ireland doesnt have more foreign investors, buying single properties like Irish people used to buy into Germany. Irish property has a decent return, its a stable country(thats why Asians invest in the US). But I suppose the fact that Irish letting laws are so basic, its quite risky( eg PRTB is too slow to evict a non-paying tenant). Where as its extremely quick to evict a non-paying tenant in the US

I know several medium size investment landlords in the UK who are very wary of the Irish market for this reason. It is possibly the same reason some Irish landlords invest outside of Ireland where rental markets have better regulation

In the UK market (I use it as an example simply because I know it) if a tenant defaults on rent there is a finite time before the situation is resolved so the loss / risk is quantifiable. Not so the Irish market.

Institutional investors seem less concerned I guess because such losses can be absorbed easier in bigger portfolios.

ffactj

You need more people to be selling the houses you are after too OP.
If there arent many going on the market where you want to buy, and there are more people looking to buy them, then the people with the most money are always going to beat you to the punch.

Victor

Lots of people saved their money since boom times. Not everyone was "Spend, spend, spend".

moxin

The_Conductor wrote: »

Investors have pretty much left the market altogether- even with rent levels where they are, returns are insufficient from an investment perspective to justify the prices being sought.

By the way on this note, stamp duty returns are way down for Sept just gone. The media never picked up the reasons why for this. Alot of it has to do with less purchasing of property.

The_Conductor

moxin wrote: »

By the way on this note, stamp duty returns are way down for Sept just gone. The media never picked up the reasons why for this. Alot of it has to do with less purchasing of property.

Anyone in the industry could have told you this- its been obvious since about April- and has been a hot topic of discussion among estate agents. Its almost amusing that the media seems to be blind to it- or in denial........ Investors are jumping ship. They see the writing on the wall.........

Victor

moxin wrote: »

By the way on this note, stamp duty returns are way down for Sept just gone.

I'm not saying you are wrong, but this seems strange. Unless you are the head of the Revenue Commissioners or the Minister for Finance, how do you have this information 3 days after the end of month?

moxin

Victor wrote: »

I'm not saying you are wrong, but this seems strange. Unless you are the head of the Revenue Commissioners or the Minister for Finance, how do you have this information 3 days after the end of month?

I read the news?

http://www.rte.ie/news/business/2014/1002/649581-exchequer-september-tax/

Stamp Duty was €210m (35.2%) lower than forecast for the month and is €41m (3.8%) behind profile for the first nine months of the year.

handlemaster

Not all family homes are 500k un Dublin . Dublin 15 you can get three beds for 160k

the groutch

you do know stamp duty isn't just on property.
it's also on share dealing, financial cards, and a variety of legal documents.

jimmycrackcorm

Tigger wrote:

if you save 30k a year for deposit then you can pay 30k on a mortgage instead So if you buy a 500k home it'll be paid for in 12-13 years or 9-10 if you have a 18% deposit Seems clear to me that that is affordable the question is how do you earn 100k

I think the question actually is who can save 30k a year?

moxin

the groutch wrote: »

you do know stamp duty isn't just on property.
it's also on share dealing, financial cards, and a variety of legal documents.

I just said that. A portion is on property while others are on shares as you said. Overall its down quite a bit.

Victor

jimmycrackcorm wrote: »

I think the question actually is who can save 30k a year?

Doctors, dentists, accountants ... anyone in a well paying job - there are lots of them.

Victor

moxin wrote: »

By the way on this note, stamp duty returns are way down for Sept just gone.

Victor wrote: »

I'm not saying you are wrong, but this seems strange. Unless you are the head of the Revenue Commissioners or the Minister for Finance, how do you have this information 3 days after the end of month?

moxin wrote: »

I read the news?

Fair point. I wouldn't have expected it until next week. However, your quote indicates what you said was somewhat misleading. Stamp duty is only 3.8% behind profile for the first nine months of the year.

http://www.rte.ie/news/business/2014/1002/649581-exchequer-september-tax/

Stamp Duty was €210m (35.2%) lower than forecast for the month and is €41m (3.8%) behind profile for the first nine months of the year.

Riverireland

The_Conductor wrote: »

A lot of 'family homes' in Dublin are being bought by people who bought apartments in the early noughties and who are finally financially able to sell their pre-existing property to buy a family home.

Investors have pretty much left the market altogether- even with rent levels where they are, returns are insufficient from an investment perspective to justify the prices being sought.

First time buyers- are active in the lower end of the market- especially apartments- not family homes.

There is pent-up demand for 'family homes' from the generation who had it drummed into them- that an apartment was a 'starter home' that they would trade up from. Hitherto- with depressed property prices- they were unable to justify selling up to move- but the fulcrum has tipped firmly in their favour.

First time buyers who expect to buy 'family homes' in the Dublin area- are chasing the property category that everyone wants- and that many people in their 30s who forewent purchasing- or who purchased apartments previously- are now in a firm financial standing, and willing to do what it takes to purchase their chosen properties.

Dublin hasn't been building 'family homes'- and indeed, we need a sea change in how we view high density living arrangements. We need proper facilities and amenities in high density units- this could include children's playgrounds, swimming pools, gyms, new bus services etc etc etc Also- 20 stories- is not high- we *need* to build up- we are incapable of servicing a low density sprawl- which is pretty much what the country is- a mad area of low density sprawl- where everyone believes they have the right to every facility and amenity in their immediate vicinities..........

We need a sea change in opinions- and this 'family home' frame of mind- has to go........

Would you be happy to raise a family on the 20th floor? I know I wouldnt!,, there is plenty of land that can be deemed residential so there is no need for high density living in Ireland.

ffactj

Riverireland wrote: »

Would you be happy to raise a family on the 20th floor? I know I wouldnt!,, there is plenty of land that can be deemed residential so there is no need for high density living in Ireland.

Apartments are great when you are young and single and going out every night on the razz.
I loved the apartment lifestyle. I would hate it now.

You move on through different stages in your life.
Living in parents house --> Sharing a room in a house/apt --> Renting/owning your own apartment --> Renting/Owning your own house.

When you get married and have kids and are looking more a more peaceful easy going stress free life, there is nothing like your own house and a garden (not a 12ft by 20ft patch of grass at the back of your house).

The_Conductor

Riverireland wrote: »

Would you be happy to raise a family on the 20th floor? I know I wouldnt!,, there is plenty of land that can be deemed residential so there is no need for high density living in Ireland.

If the 20th floor- was in a complex with a playground, gym, swimming pool, close by to school and other amenities and facilities, at a reasonable price, and convenient for work- sure, why not.......

For the record- I am raising 2 young children in a townhouse with no garden, the facility has no green space for the children- but is close by to facilities and amenities and has 3 bus routes within 50m of my front door (which opens onto main street). So- while it may not be the 20th floor- and it doesn't have the wonderful shopping list of facilities and amenities discussed- it has a few of them- sufficient boxes were ticked........ That said- I hadn't planned on living her long term- circumstances now dictate that I have to (due to ill health- neither my wife nor I will ever qualify for a mortgage again).

We do need a seachange in how we view things........

ffactj

The_Conductor wrote: »

If the 20th floor- was in a complex with a playground, gym, swimming pool, close by to school and other amenities and facilities, at a reasonable price, and convenient for work- sure, why not.......

For the record- I am raising 2 young children in a townhouse with no garden, the facility has no green space for the children- but is close by to facilities and amenities and has 3 bus routes within 50m of my front door (which opens onto main street). So- while it may not be the 20th floor- and it doesn't have the wonderful shopping list of facilities and amenities discussed- it has a few of them- sufficient boxes were ticked........ That said- I hadn't planned on living her long term- circumstances now dictate that I have to (due to ill health- neither my wife nor I will ever qualify for a mortgage again).

We do need a seachange in how we view things........

Ive lived in several different apartment blocks in the US and in Paris.
Yes they had all those facilities. I still would hate to live in them now.

Apartment living is overrated. It is for when you either dont need to, dont want to, or cant afford to live in a house.

You could get used to living in a cow shed if you had nowhere else to live. Thats how i see apartment living. Ask anyone living in an apartment, would they rather live in a house, in any country. I have asked this question often, and i find the ones over 35 or so, and the ones with children will mostly say yes. I do know the odd person who sold a house and moved to an apartment though, because they wanted less garden and maintenance, but they are very few.

Victor

ffactj wrote: »

Ask anyone living in an apartment, would they rather live in a house, in any country.

In cold countries, people much prefer to live in apartments. You don't want to see the energy bills and effort involved in living in a house. Even in neo-capitalist Moscow, the 'in' thing is to have an apartment.

In poor countries, an apartment is often the only alternative to living in a shanty town.

professore

hfallada wrote: »

OP you have to remember, the recession only affected some people. Yes everyone get higher taxes, but a lot of middle and upper-middle class families werent affected by the recession to severly. They have benefited with the lower prices of most goods(building work is a lot cheaper now).Their mortgages were probably tracker, meaning they are probably paying an extremely small proportion of what they used to spend on their mortgage. Or if they were renting, their rent is still probably about a third less than the boom and for a while their rent was probably 40% cheaper than renting in 2007.

Meaning they were able to save huge amount of money. If you and your other half were able to save €3,000 a month for the last 7 years. You would have €250,000 in savings for a mortgages. And if you both had decent jobs(which people in suburbs of Dublin generally have), its not hard to save €3,000 a month.

As long as you have no kids.

ffactj

Victor wrote: »

In cold countries, people much prefer to live in apartments. You don't want to see the energy bills and effort involved in living in a house. Even in neo-capitalist Moscow, the 'in' thing is to have an apartment.

In poor countries, an apartment is often the only alternative to living in a shanty town.

Ireland cannot be considered cold compared to some of the places ive lived.
Its decidedly mild compared to hot and cold climates.

The_Conductor

We're really getting off topic here..........

Corinthcanal

There are people downsizing from mortgage free houses, people trading up from mortgage paid houses and people buying with inherited money. The first time buyer saving a deposit and needing a mortgage are out of the picture in a time of restricted supply.

The_Conductor

Corinthcanal wrote: »

The first time buyer saving a deposit and needing a mortgage are out of the picture in a time of restricted supply.

They still make up 40% of all sales though- albeit on very limited supplies.......

MouseTail

The_Conductor wrote: »

They still make up 40% of all sales though- albeit on very limited supplies.......

not in the sector OP is referring to though. The €500k properties.

The_Conductor

MouseTail wrote: »

not in the sector OP is referring to though. The €500k properties.

First time buyers were only ever minor players in the 500k+ category- however, over the past 6 years, as a percentage of sales- they purchased a significantly higher percentage of these type properties than historically they would have done.

First time buyers in this category- tended to be older and in more secure and well paying employment- and often with familial financial backing.

The issue is multi-pronged- a severe lack of supply over-all- accompanied by a significant cohort of people who purchased unsuitable property in the expectation that they would live in it short-term, before moving onto this property type- in competition with all those first time buyers who felt that as they had kept out of the madness- they should be in a position to reasonably purchase this property class- and indeed they were- while other owner occupiers were in negative equity and unable to move........

It now looks certain that the proposed incentives for first time buyers mooted for next week's budget are to be side lined- in favour of a carrot and stick approach geared solely at the construction industry- to develop an additional 50k units between now and 2020. Of this total- an immediate 6k are new developments in the Dublin region (which is a woefully small number given the demand in the area).

The government are running scared of being accused of meddling in the market, given our recent experiences- so they're planning to structure incentives and penalties to get builders out the door- with lower levies (or no levies at all) the faster properties are constructed- along with lower taxes on completion- coupled with the abolition of windfall tax on development land- but a 1-1.5 annual tax maxing out at 9% for unutilised development land.......

There are some areas that look very very interesting- notably the entire development in the Loughlinstown area- which is serviced by the Luas- and has a lot of potential......

Now to see if the planning authority gets nuked- and high density development gets off the ground (as it were)- for once and for all..........