Property Market 2015

Villa05

Hopefully a use it or loose it tax

listermint

Villa05 wrote: »

We have being abusing rules on how much people can borrow for over 20 years. Now we have clear rules. They will stagnate or rise/fall moderately in unison with local market economy.

I do see pressure on these rules though and we have very weak and a shade corrupt people in power. Things will change for the worse if the rules come under pressure

I agree but the market is not adjusting well enough as the stock level is not there. And we have developers that appear to be holding off building anything at all as there isnt the celtic tiger meat on the bones. Some of these guys seem to only want to turn back to celtic tiger profits rather than anything that resembles a stable building sector.

What should we be doing here ??

Archaeoliz

listermint wrote: »

I agree but the market is not adjusting well enough as the stock level is not there. And we have developers that appear to be holding off building anything at all as there isnt the celtic tiger meat on the bones. Some of these guys seem to only want to turn back to celtic tiger profits rather than anything that resembles a stable building sector.

What should we be doing here ??

The suggestion to compensate developers for selling below the market price seems like a bailout of the developers similar to the bailout of the banks but not for any necessity just to keep their % profit high and with ultimately only a higher price to pay for the taxpayer who is the buyer and therefore paying for that compensation anyway.

It's a huge glaring siren of a symptom that something is seriously wrong if that plan isn't being laughed out of the office door.

seamus

listermint wrote: »

What should we be doing here ??

I agree a use it or lose it tax is the way to go here. Anything that's zoned residential can be taxed up to 10% of its value for every year that it does not have submitted or approved planning permission on it.

The rate can be adjusted on a per-council basis and if someone has residential zoned land that's not part of a county development plan, they can apply to have it rezoned.

Bob24

http://www.rte.ie/news/budget/2015/1013/734420-budget-2016-blog/

Minister Noonan announces plans for NAMA to provide social housing. He says it will aim to to deliver 20,000 residential units before the end of 2020. 90% will be in the greater Dublin area. About 75% will be houses, mainly starter homes.

He says: "NAMA will deliver these units by working with developers. Achieving this new target by the end of 2020 means delivering on average 80 new housing units every week across some 100 active sites."

It will require funding of €4.5 billion, which the minister says will be recovered. He says the plan will not compromise NAMA's debt repayment commitments.

6541

Bob24 wrote: »

http://www.rte.ie/news/budget/2015/1013/734420-budget-2016-blog/

That will have a serious effect on the Market.

mathie

6541 wrote: »

That will have a serious effect on the Market.

In what way?

6541

mathie wrote: »

In what way?

Like NAMA building 20,000 homes in the greater Dublin region is going to distort the Market. Supply Vs Demand. I am no expert and would welcome some of the more knowledgeable people to expand on this.

The_Conductor

6541 wrote: »

Like NAMA building 20,000 homes in the greater Dublin region is going to distort the Market. Supply Vs Demand. I am no expert and would welcome some of the more knowledgeable people to expand on this.

NAMA are building 18,000 homes in the greater Dublin area between now and 2022 (aka 7 years time). In the same period it is predicted we need 200,000 new homes in the Dublin area- and another 80-100,000 nationally. The NAMA building programme- won't even cover 10% of the expected needed properties in the time frame they are to be delivered.

handlemaster

No reduction in the high taxes for landlords. I hope they have taken into consideration more rent rises next year when tackling the housing crises as private landlords handing 50% of rent recieved back to the government is only going to keep rents going up.

I Am The Law

A summary of why the property market is "dysfunctional"

http://www.irishtimes.com/opinion/john-mcmanus-housing-policy-dilemma-a-tale-of-two-irelands-1.2390503

Bob24

Obviously they are not neutral in this - but MyHome.ie's initial reaction to the budget is not very positive: http://blog.myhome.ie/2015/10/14/many-first-time-buyers-will-be-forced-to-defer-home-ownership-following-budget/

Does this imply upward pressure on prices? Still too few houses being built and yet people will have more money in their pockets due to tax cuts.

Obviously if this pushes prices up too much, a crash is inevitable at some point. We are incapable of the slow steady growth which is the norm in some places.

Alter_Ego

Deleted User wrote: »

Does this imply upward pressure on prices? Still too few houses being built and yet people will have more money in their pockets due to tax cuts.

Few hundred euro per annum in tax cuts will have little or no impact on people's purchasing power, especially when it's offset by rents going up by similar amount at the same time.

But we're all rich again now
I think it might make some small impact on people's confidence. Could be wrong. As you say, if rents are going up at the same time it will hardly help people accumulate a deposit.

In terms of the Central Bank rules - and correct me if I'm wrong - the loan-to-income ratio is based on gross income and therefore tax cuts make no odds.

The only thing is that in this phase of the cycle, the economy generally is growing quickly and is about to get a stimulus. That could lead to pay rises on top of the tax cuts if businesses start doing better because people are eating out, buying cars, replacing fridges etc.

Wishful thinking perhaps...

Alter_Ego

In terms of the Central Bank rules - and correct me if I'm wrong - the loan-to-income ratio is based on gross income and therefore tax cuts make no odds.

The loan to income ratio is indeed based on gross income. Technically, your net income increase will improve your repayment capacity so it may be easier to get a mortgage but still for the same amount as before.

Santy2015

Supply will be a huge problem in the cities especially Dublin and Cork but if you go 30/40 minutes outside those cities there's value to be had hence why my partner and I are saving like crazy. You can those prices going up but hopefully it'll be small percentages.

Alter_Ego

Santy2015 wrote: »

Supply will be a huge problem in the cities especially Dublin and Cork but if you go 30/40 minutes outside those cities there's value to be had hence why my partner and I are saving like crazy. You can those prices going up but hopefully it'll be small percentages.

30/40 minutes at the rush hour is not going to take you far out of Dublin. It takes a lot of people more time to travel less than 10 miles already.

I am fortunate enough to be on flexi time so I start early (I am usually at work at 8 AM) and at this time all the major routes into Dublin are already busy. The M50 southbound is often at a standstill around Sandyford at 7:45! (I go the other way).

As far as value goes, Dublin prices already stretch as far as Ashbourne > Naas > don't even look at Wicklow. I am talking about Swords/D15/Lucan/D24 prices being in the same ballpark.

The cost of commute over 30 years is not something to sneeze at either, it adds up quickly.

I am in the same boat as you - saving money and hoping prices are not going to go up in the short term, but I think the only scenario in which moving out of Dublin would work is if you can get a job on the outskirts of the big smoke. Otherwise, you'll end up spending your life stuck in traffic or in an overcrowded train.

The_Conductor

Deleted User wrote: »

Does this imply upward pressure on prices? Still too few houses being built and yet people will have more money in their pockets due to tax cuts.

Obviously if this pushes prices up too much, a crash is inevitable at some point. We are incapable of the slow steady growth which is the norm in some places.

If you sit down and look at what exactly the changes in tax mean- its less than a 2% increase in net income for most people (and an even lower percentage- if you are one of the wealthier people earning 75k+)

With an increase in free-pre-school places from age 3 to 5 1/2 (or whenever your child starts school)- this is put even greater pressure on after-schools who also run creches/pre-schools- as its anticipated a higher number of people will put off sending their children to school earlier- driving prices higher for workers with children of school-going age. Our after-school have already advised of fewer places and higher prices from next June (when the current pre-school cycle ends).

To be brutally honest- the budget is more smoke and mirrors than anything- while you may have a few extra schekels in your wallet every week (probably a tenner or so)- its just as likely that the knock-on effects of budget- esp. for families- will far outweigh the minor monetary increase most people will see.

USC was a very blunt way to reform taxes- and unfairly advantaged those on higher incomes- a person on 20k only benefits net 1/3 as much as a person on 75k (plug the numbers- it really is the case that its this top heavy).

I can't see the budget having any effect whatsoever on house prices- or indeed supply- save the NAMA initiative- which won't effect the market to any large extent- as its only going to build less than a quarter of the necessary supply of 'starter homes' that we need (and god only knows what a starter home is- or indeed, what the purchasers will do when they need to move on to a larger family friendly home- which we haven't built in decades).

Riverireland

The_Conductor wrote: »

If you sit down and look at what exactly the changes in tax mean- its less than a 2% increase in net income for most people (and an even lower percentage- if you are one of the wealthier people earning 75k+)

With an increase in free-pre-school places from age 3 to 5 1/2 (or whenever your child starts school)- this is put even greater pressure on after-schools who also run creches/pre-schools- as its anticipated a higher number of people will put off sending their children to school earlier- driving prices higher for workers with children of school-going age. Our after-school have already advised of fewer places and higher prices from next June (when the current pre-school cycle ends).

To be brutally honest- the budget is more smoke and mirrors than anything- while you may have a few extra schekels in your wallet every week (probably a tenner or so)- its just as likely that the knock-on effects of budget- esp. for families- will far outweigh the minor monetary increase most people will see.

USC was a very blunt way to reform taxes- and unfairly advantaged those on higher incomes- a person on 20k only benefits net 1/3 as much as a person on 75k (plug the numbers- it really is the case that its this top heavy).

I can't see the budget having any effect whatsoever on house prices- or indeed supply- save the NAMA initiative- which won't effect the market to any large extent- as its only going to build less than a quarter of the necessary supply of 'starter homes' that we need (and god only knows what a starter home is- or indeed, what the purchasers will do when they need to move on to a larger family friendly home- which we haven't built in decades).

Very much looking forward to seeing where these houses are going to be built, and to a lesser extent by whom.

The_Conductor

Riverireland wrote: »

Very much looking forward to seeing where these houses are going to be built, and to a lesser extent by whom.

And- whether these are 'starter' homes to get people on 'the property ladder' or whether they are reasonable properties people can live in for the medium to longer term- with access to facilities/amenities (such as schools, public transport, shops etc etc)........

Starter homes = a waste of everyone's time (as there is no next stage people can aspire to- so they end up in inappropriate accommodation- trying to bring kids up in apartments with no access to schools, playgrounds etc)

Bob24

Direct impact of the CBI rules: Mortgage approvals and drawdowns decline for the first time in two years

If this becomes a trend and unless cash buyers are on the rise, this will have to mean lower prices, lower volumes, or both.

eringobragh

^ There's no point in speculating, I did it myself for long enough. The Irish property market (and physche) is unique

mel123

Bob24 wrote: »

Direct impact of the CBI rules: Mortgage approvals and drawdowns decline for the first time in two years

If this becomes a trend and unless cash buyers are on the rise, this will have to mean lower prices, lower volumes, or both.

Or they get rid of the new rule, which wouldn't surprise me

Bob24

Bob24 wrote: »

Direct impact of the CBI rules: Mortgage approvals and drawdowns decline for the first time in two years

If this becomes a trend and unless cash buyers are on the rise, this will have to mean lower prices, lower volumes, or both.

Did they appoint a new Central Bank governor yet?

Bob24

eringobragh wrote: »

^ There's no point in speculating, I did it myself for long enough. The Irish property market (and physche) is unique

Agreed - but there is a hard fact here: less mortgage money has been going to the property market for the first time in 2 years and the fact that it comes 6 months after AIPs stopped being issued based on the old rules can't be a coincidence..

seamus

Bob24 wrote: »

Direct impact of the CBI rules: Mortgage approvals and drawdowns decline for the first time in two years

Well, this is interesting:

The average “nonpurchase mortgage” was up 33.8 per cent year-on-year to €125,806.

Average remortgage is over half the price of the average property.

What do we think is going on here? Has to be people with long-term ownership (i.e. someone who bought before 2003/2004) releasing equity. Parents perhaps taking out equity to give to children as deposits? Even for home improvements, €125k is a massive amount unless you're building a new wing onto a house or something.
The overall value of remortgages is pretty low (€33m I think), but that still stood out to me as a pretty enormous average.

It'll still be late next year before we can gan a full picture of the effect of the CB rules.

The mistake we continually make in Ireland is attempting to implement changes to fix a property market within one selling season. Property just isn't that elastic, people don't/can't respond quickly to changes in the market. So panicking and trying to "fix" things when changes introduced six months ago don't seem to be having the right effect, is as effective as steering away from a skid.

Mortgage lending is going down, anecdotally I'm seeing Dublin property prices dropping on the price register. As someone who just bought, it's obviously painful for me to see prices dip, but I feel it's essential that we let this run its course. We didn't really fnck with the property market when the bubble burst (not that we had any money to do so), and it came back all on its own, despite the cited doom and gloom of a Japanese-style 20-year plunge.

We need to stand back and let it find its own balance.

Santy2015

It will take time for CB rules to take affect you're right. I'm hoping to buy myself in the middle of next year and in my own opinion I can't see much changing in the mean time, it'll take at least 2 full years of the new rules to see their real effect

fret_wimp2

Or they get rid of the new rule, which wouldn't surprise me

So to break it down to its bare bones:

-Property prices today are based on when people could borrow 4, 5 or even 6x their annual salary.
-Limits are in effect to prevent people borrowing beyond their means nowdays, roughly 3x salary.
-Property owners still want their property to be worth what they paid for it, lets say 5x salary but finance is not available.
-Stale mate - property is expensive, prospective buyers dont have access to the cash.

And its still in peoples minds that a potential solution to this is relax the borrowing rules?

handlemaster

Santy2015 wrote: »

It will take time for CB rules to take affect you're right. I'm hoping to buy myself in the middle of next year and in my own opinion I can't see much changing in the mean time, it'll take at least 2 full years of the new rules to see their real effect

People will just stump up for the higher deposit. There are alot who didnt want to buy since 2007 so I wouldnt be overly concerned about the deposit been an issue