20% mortgage deposits, house price dip?

With the new minimum 20% deposit required for a mortgage from Jan 1st what are peoples opinions on house prices?

Will they dip as first time buyers find it almost impossible to purchase and the chain stalls or do people think it will be business as usual?

Thinking of buying some rental property as Im thinking there will be a huge demand for this type of property and could be some bargains about as the market crashes again.

Victor

Falls are likely in December-January anyway due to the change in the CGT regime.

Kevin the Kid

Its depressing. Highest rents ever known in Ireland with zero availability. House prices in Dublin average 350k (yea i know there are cheaper) 70k needs to be saved for a deposit. Banks want to loan you 3 times your wage. And the hits keep on rollin

gaius c

Victor wrote: »

Falls are likely in December-January anyway due to the change in the CGT regime.

There's actually been something of a phoney war going on over the summer as wannabe FTB's abandoned the market because they were wasting their time viewing houses going for way over asking.

mr_seer

Kevin the Kid wrote: »

Its depressing. Highest rents ever known in Ireland with zero availability. House prices in Dublin average 350k (yea i know there are cheaper) 70k needs to be saved for a deposit. Banks want to loan you 3 times your wage. And the hits keep on rollin

The measures will lead to a fall in prices. Supply has increased hugely in recent months. There is nothing depressing about that. Just wait

yoshiktk

Greatest idea ever. Kick in the a** for worker class and maybe lower end of middle class.
With this probably a lot of ppl will have to stay on rented forever.
As a future buyer I can't understand logic behind it. With the new rules I'll have to wait another year or two to save money. Instead of spending money on something else im stuck with higher rent. At least they should introduce max rent cap as well.

Brussels Sprout

Right so would I be right in saying that if this comes to pass then it'll have both short term and long term affects:

short term: The property market completely seizes to a halt. What little activity there currently is, stops as the gap between sellers demands and buyers possibilites is widened due to the reduced mortgage availabilty. An immediate result of this is rental prices continue to rocket up.


long term: House prices drop. They'll have to. Eventually cash buyers will run out or leave the market. Wages are stagnating or not rising by much in a lot of sectors. With rental prices increasing potential buyers will find it harder to save. Eventually a new lower equilibrium point will be reached and then the market will have corrected itself.

The process will be painful but the destination could be worth it.

yoshiktk

Brussels Sprout wrote: »

Right so would I be right in saying that if this comes to pass then it'll have both short term and long term affects:

short term: The property market completely seizes to a halt. What little activity there currently is, stops as the gap between sellers demands and buyers possibilites is widened due to the reduced mortgage availabilty. An immediate result of this is rental prices continue to rocket up.


long term: House prices drop. They'll have to. Eventually cash buyers will run out or leave the market. Wages are stagnating or not rising by much in a lot of sectors. With rental prices increasing potential buyers will find it harder to save. Eventually a new lower equilibrium point will be reached and then the market will have corrected itself.

The process will be painful but the destination could be worth it.

That's why I think that the rent cap should be introduced as well to minimise the time for market to correct itself. Without it the time it will take to get in all right shape not only be long but hard for a lot of people.
A lot of people don't have a big choice to move outside the expensive area to save money so I wouldn't be surprised to see that even with the new rules a lot of them would go for cheaper houses just because they need to buy one.
Unfortunate a common sense doesn't apply always here.

jay0109

yoshiktk wrote: »

Greatest idea ever. Kick in the a** for worker class and maybe lower end of middle class.
With this probably a lot of ppl will have to stay on rented forever.
As a future buyer I can't understand logic behind it. With the new rules I'll have to wait another year or two to save money. Instead of spending money on something else im stuck with higher rent. At least they should introduce max rent cap as well.

These changes will lower prices. So you'll have to suck up some short term pain for some long term gain

Glenbhoy

Brussels Sprout wrote: »

Eventually cash buyers will run out or leave the market. Wages are stagnating or not rising by much in a lot of sectors. With rental prices increasing potential buyers will find it harder to save. Eventually a new lower equilibrium point will be reached and then the market will have corrected itself.

With the CGT relief ending in December, one would imagine there's little incentive for the cash buyer to remain in a market the where the double peak has just been hit. I don't think the importance of the cgt exemption in the recent rise in prices can be overstated.

Investors with cash earning no interest had an option to invest in property and pay no tax on the gain (if any, of course), if you had the cash, it was worth taking the punt as there was plenty of rental income to be had even if the capital gain never materialised. Remember the market between 2012 and 2013 was approx 55% cash, mortgages advanced were the lowest on record.

yoshiktk

jay0109 wrote: »

These changes will lower prices. So you'll have to suck up some short term pain for some long term gain

I hope so. Already few of my friends are having tough decision, do they try do buy something now or wait another year or more when in the meantime they have to pay premium for renting.
Its the same with me, in next year I would have the 10% for deposit. With the amount of mortgage I would go my monthly expenses for home would fall by few hundred Euros.
Now I have to save even more.
I wouldn't be surprised to see some sort of standstill of houses sold in next year.

Royale with Cheese

As a FTB who won't be affected by these regulations, is it a terrible idea to buy right now? Seems like I could be buying right at the top of another peak.

I really feel the need to get out of shared accommodation and get my own place, but I am not going to be paying the kind of rents going right now. If I were to buy in my position, the monthly repayments would be very managable (initially at least) and not much more than what I'm currently paying for a room in a house share.

Its not that I want to wait for a bargain, more so I was priced out of the areas I really wanted to buy in. I would probably like to wait and see what happens but I'm also dying to quit my job, and start contracting under my own company. Getting a mortgage once I do that will be near impossible.

What kind of price drops do people think would be likely? There's no shortage of cash buyers at the moment. I'm competing nearly solely with cash buyers for the place I'm bidding on.

baldbear

I can see house around the 200k - 250k mark in Dublin going up. This seems to be what a lot of first time byers have to buy with and people can easier save deposits for that amount.

gaius c

Royale with Cheese wrote: »

As a FTB who won't be affected by these regulations, is it a terrible idea to buy right now? Seems like I could be buying right at the top of another peak.

I really feel the need to get out of shared accommodation and get my own place, but I am not going to be paying the kind of rents going right now. If I were to buy in my position, the monthly repayments would be very managable (initially at least) and not much more than what I'm currently paying for a room in a house share.

Its not that I want to wait for a bargain, more so I was priced out of the areas I really wanted to buy in. I would probably like to wait and see what happens but I'm also dying to quit my job, and start contracting under my own company. Getting a mortgage once I do that will be near impossible.

What kind of price drops do people think would be likely? There's no shortage of cash buyers at the moment. I'm competing nearly solely with cash buyers for the place I'm bidding on.

Perhaps but if you're in a position to close quickly, that puts you in a strong position with the vendor who may or may not be eager to close quickly. If they get angsty, you could always suggest that a 5% discount would speed things up massively.

gaius c

yoshiktk wrote: »

Greatest idea ever. Kick in the a** for worker class and maybe lower end of middle class.
With this probably a lot of ppl will have to stay on rented forever.
As a future buyer I can't understand logic behind it. With the new rules I'll have to wait another year or two to save money. Instead of spending money on something else im stuck with higher rent. At least they should introduce max rent cap as well.

Chill. Your mortgage will end up smaller and seeing as mortgage lending terms are still very long, this will make a big difference to your future financial well being.

Fol20

Why do people really think this is such a bad idea?

We had a massive banking crash because banks overlended to people who in reality couldnt afford a large mortgage. At least this way, it will truly test people ability to save for a mortgage rather than getting 100pc mortgages again.

Some people should only stay as renters their entire life. Why do people in Ireland think getting on the property ladder is so important when many eu countries are happy to rent...

Long term, house prices should fall as demand will decrease. This will mean that people who do eventually save up and get a loan will have less of a mortgage and who knows, may actually be able to pay back their mortgage before they retire.

Why do you want to cap rental prices. Its all about supply and demand and people should be able to pay what they like for a property without more influence/regulations from a property market that is already heavily controlled by the government. A fool is easily parted with his money, but he should still be free to pick and choose how he wants to spend his money. Its like buying a house. Who ever is willing to pay the most should get the rental property. If the landlord wasnt able to achieve a certain rental price, he would certainly lower the rent, but if people are willing, he should be afforded the right to let it at whatever amount he wanted.In my eyes, there will eventually be a nice equilibrium for both parties.

o1s1n

I wish this was around when we were house hunting last year as we already had 20% saved and it might have knocked out some of the competition!

Mr.McLovin

baldbear wrote: »

I can see house around the 200k - 250k mark in Dublin going up. This seems to be what a lot of first time byers have to buy with and people can easier save deposits for that amount.

So they'll be the same price as the 300k - 350k mark which people maybe finding it hard to afford...

then why would I buy the 200k - 250k house when I can get the 300k - 350k house for the same price

just jokin'

bilbot79

yoshiktk wrote: »

Greatest idea ever. Kick in the a** for worker class and maybe lower end of middle class.
With this probably a lot of ppl will have to stay on rented forever.
As a future buyer I can't understand logic behind it. With the new rules I'll have to wait another year or two to save money. Instead of spending money on something else im stuck with higher rent. At least they should introduce max rent cap as well.

Nonsense it's a gift to the working class. Where were you in 2007? It's tactical genius. Flush the cash buyers out of the market by constricting supply and raising prices then protect the working class from themselves by reducing the prices through the 20% deposit

helimachoptor

I hope it leads to a dip, myself and the wife have a 6 figures saved, if it makes houses in the areas we want to buy more reasonable im all for it tbh

chris85

helimachoptor wrote: »

I hope it leads to a dip, myself and the wife have a 6 figures saved, if it makes houses in the areas we want to buy more reasonable im all for it tbh

Yeah grand for you with six figures saved. The others of us worked hard for last 3-4 years saving to get decent 5 figure sum to cover 10% + all costs + some leftover money for furniture/appliances/decoration. I understand the reasoning but a kick in the gut for a lot of people out there to be honest. Rents are high with huge shortage of supply and this will push many many more into the rental market making it worse there in the short term.

helimachoptor

chris85 wrote: »

Yeah grand for you with six figures saved. The others of us worked hard for last 3-4 years saving to get decent 5 figure sum to cover 10% + all costs + some leftover money for furniture/appliances/decoration. I understand the reasoning but a kick in the gut for a lot of people out there to be honest. Rents are high with huge shortage of supply and this will push many many more into the rental market making it worse there in the short term.

Completely agree, myself and the OH have been saving for nigh on 10 years, to have the rug pulled from under you is pretty tough to swallow

chopper6

Royale with Cheese wrote: »

Its not that I want to wait for a bargain, more so I was priced out of the areas I really wanted to buy in..

Unfortunately that's normal.

I dont know anybody now who could afford to buy thier parents' home for example.

My Granny bought her 5 bed house in clontarf for £400 back in 1940's...the same house today would probably be worth well over a million quid.

Michael D Not Higgins

chopper6 wrote: »

Unfortunately that's normal.

I dont know anybody now who could afford to buy thier parents' home for example.

My Granny bought her 5 bed house in clontarf for £400 back in 1940's...the same house today would probably be worth well over a million quid.

And Clontarf was probably not where your granny wanted to buy initially but the area has matured into a desirable location. The same happens every generation.

Brussels Sprout

chris85 wrote: »

Yeah grand for you with six figures saved. The others of us worked hard for last 3-4 years saving to get decent 5 figure sum to cover 10% + all costs + some leftover money for furniture/appliances/decoration. .

I'm sure that other poster worked equally hard to save their 6 figure sum as well.

chopper6

Michael D Not Higgins wrote: »

And Clontarf was probably not where your granny wanted to buy initially but the area has matured into a desirable location. The same happens every generation.

I think the house they wanted originally was £30 extra but they couldnt afford it.

Unfortunately if people want to own thier own property more than anything else they will have to look at what they can afford and where they can afford rather than borrowing obscene amounts of money to live somewhere they think they can afford.


When i bought my place 13 years ago we were priced out of Glasnevin and Drumcondra and could only afford finglas...many firstime buyers one year later were priced out of finglas and had to move either to places like Clonee(which are much further out) or cheaper places like Popintree and Edenmore.

And just my two cents worth on new builds..they are NOT worth the money thats being asked of them at the moment.

Most have no gardens,tiny interior spaces,noise pollution problems and issues with private parking...there's another thread on this forum where asking prices for an estate halfway up the mountains are in the region of 600k...don't beleive the hype..you can still get bargains for family homes in less "sought-after" areas...most of which are perefectly fine and often build quality is exceptional.

superman28

There is nothing short of sheer panic buying at the moment (in Dublin),, so I would certainly hold off a purchase until the next year or two..
Everyone owning their own property is an Irish pipe dream,, simply put,, their are plenty of people who will have no choice but to rent for the rest of their lives,, not such a bad thing if the rental market had serious reforms..


In terms of house prices,,
Consider these facts

1. With cash buyers (investors) making up 40-50% of the market, most of this demand will go before the CGT exemption runs out in December. (reduce demand)
2. The central bank will introduce stricter lending with 20% deposits needed,, (reduce demand)
3. Contruction has started (slowly) but picked up in Dublin (increased supply)
4. As house prices start to slow down, more potential sellers will put their properties on the market. (increase supply)

I don't think their will be a crash,, but a good slow down in the crazy house price hikes we have seen this year.. I would say next year and the year after would be a better time to buy than now..

chris85

Brussels Sprout wrote: »

I'm sure that other poster worked equally hard to save their 6 figure sum as well.

I have no doubt about that, that is not my point but its fine for them as the new rules suit them. Many out there have been saving for a few years now in try setup a home for the future but this is going to be upsetting for many which have worked hard to get 10% + all the other costs. Its easy for someone which the new rules suit to say its good for them as this can only be good for them. I genuinely hope they get the best house they want but others out there are stuck in a very tough and under supplied rental market.

gaius c

superman28 wrote: »

There is nothing short of sheer panic buying at the moment (in Dublin),, so I would certainly hold off a purchase until the next year or two..
Everyone owning their own property is an Irish pipe dream,, simply put,, their are plenty of people who will have no choice but to rent for the rest of their lives,, not such a bad thing if the rental market had serious reforms..


In terms of house prices,,
Consider these facts

1. With cash buyers (investors) making up 40-50% of the market, most of this demand will go before the CGT exemption runs out in December. (reduce demand)
2. The central bank will introduce stricter lending with 20% deposits needed,, (reduce demand)
3. Contruction has started (slowly) but picked up in Dublin (increased supply)
4. As house prices start to slow down, more potential sellers will put their properties on the market. (increase supply)

I don't think their will be a crash,, but a good slow down in the crazy house price hikes we have seen this year.. I would say next year and the year after would be a better time to buy than now..

Strictly speaking, that won't reduce demand, just the amount a good chunk of that demand is able to spend.

skydish79

Don't worry this will never be introduced, it should but it won't

The lobbyists are working hard as we speak, estate agents , property developers etc, Fine Gael will ensure this doesn't happen

gaius c

skydish79 wrote: »

Don't worry this will never be introduced, it should but it won't

The lobbyists are working hard as we speak, estate agents , property developers etc, Fine Gael will ensure this doesn't happen

I don't think this move has come from our government. Haven't you noticed just how silent they've been on the matter?

CB answer to Europe, not Kildare house and I suspect that it's Europe this move has come from. Furthermore, I suspect that it's the quid pro quo for the ECB taking loss-making tracker mortgages off the books of the Irish banks, which apparently is a very real possibility.