Property Market 2015

farrerg

Dee24 wrote: »

We have no credit card debt, himself has a car loan of €500 a month with 2 years left to repay, and we've about 50k in savings. And no children as yet. And we're earning €90k between us.

So we visited the bank today, and with the new rules for a 20% deposit, they basically said that by stress testing us with his car loan and our existing mortgage (even taking into account what we're taking in in rent), we would only get €100k.

But that once his car loan is paid off, we could get €200k

So we're gonna wait another year, keep saving, pay off his car in full in 12months time, and try again.

In our own interests, we really want to see house prices come down in meath over the next 12 months.

Why not clear the loan now from your savings? The interest rate on the loan must be higher than you'll get for your deposits. Then keep saving the additional 500 per month, or the 1000 that you're going to try and pay off per month for the next year

You're going to have to wait either way but you may as well save yourself a few bob

Archaeoliz

With a risk of generalising; I think the majority of people wanting to buy (myself included) want to buy a home for their family not just a house. Although there is an investment aspect to it, it's more important as a roof over my head and a place for my kids to grow up. I don't want to be paying someone else's mortgage with my rent for a moment longer than I need to.

If people can't afford the asking prices as they are then either they must fall, or remain static, to allow other economic factors to catch up (i.e. salaries/interest rates for savers etc) or buyers will be unable to buy and sellers unable to sell. As Dublin falls, the commuter belt is remaining resilient. Surely that's down to buyer compromise and affordability?

I actually see static prices as very positive for the property market because if prices remain relatively still for a while then vendors who want to sell will have to accept the market reality that we're not going back to bubble prices and buyers have an opportunity to save for a realistic goal. Buyers and sellers win in a less volatile market. Sellers aren't tempted by greed and Buyers have an opportunity to buy for a reasonable price.

OfflerCrocGod

Rent == mortgage interest.

I don't understand why people think renting is throwing money away while interest payments are glossed over.

Archaeoliz

OfflerCrocGod wrote: »

Rent == mortgage interest.

I don't understand why people think renting is throwing money away while interest payments are glossed over.

I don't see the logic?
Mortage = repayment of loan plus interest,
Rent = repayment of someone else's loan plus their interest.

At the end of the mortgage term, when I have it paid off I get to keep the house. Which I paid for. Don't get to keep the house no matter how long I stay in it when I rent.

gaius c

Dee24 wrote: »

Hi all

Have been following this thread constantly over the last year, so thought I'd throw in our situation.

Myself and the hubby bought down the country in 2007, as that's where we wanted to settle and raise kids. But unfortunately he was let go from his job and couldn't get work locally for over 6 months. So he took a job in Dublin and came home weekends for 4 years. Eventually last year we realised he just wouldn't get work back at home. I was lucky that I could get a transfer, and so we both rent in meath at €865 a month now and commute to Dublin. And we're renting our house down the country out.

We have no credit card debt, himself has a car loan of €500 a month with 2 years left to repay, and we've about 50k in savings. And no children as yet. And we're earning €90k between us.

So we visited the bank today, and with the new rules for a 20% deposit, they basically said that by stress testing us with his car loan and our existing mortgage (even taking into account what we're taking in in rent), we would only get €100k.

But that once his car loan is paid off, we could get €200k

So we're gonna wait another year, keep saving, pay off his car in full in 12months time, and try again.

In our own interests, we really want to see house prices come down in meath over the next 12 months.

Sorry to hear of your situation.
Is there any way you could offload the original property? Unfortunately, until you get rid of that, it will seriously compromise what a bank can offer you.

MarkAnthony

OfflerCrocGod wrote: »

Rent == mortgage interest.

I don't understand why people think renting is throwing money away while interest payments are glossed over.

Because you can rent for as long as you like and you'll never own it.

wenbo

My colleague pays €750/m for 2bed apartment (Galway). The marketing price is 100k.

OfflerCrocGod wrote: »

Rent == mortgage interest.

I don't understand why people think renting is throwing money away while interest payments are glossed over.

gaius c

Archaeoliz wrote: »

I don't see the logic?
Mortage = repayment of loan plus interest,
Rent = repayment of someone else's loan plus their interest.

At the end of the mortgage term, when I have it paid off I get to keep the house. Which I paid for. Don't get to keep the house no matter how long I stay in it when I rent.

His point is that if mortgage interest is higher than rent (as it was towards the latter years of the bubble), you are probably losing out even allowing for having an asset at the end of the mortgage term.

Whether that's applicable right now is doubtful though.

MarkAnthony

gaius c wrote: »

His point is that if mortgage interest is higher than rent (as it was towards the latter years of the bubble), you are probably losing out even allowing for having an asset at the end of the mortgage term.

Whether that's applicable right now is doubtful though.

Even those of us that got royally bent over and... anyway... ended up winning over rents during the last bubble because of trackers. We lost heavily due to neg equity but I type this in my 3 bed semi that I bought despite that so there is light at the end of the tunnel.

The massive issue with renting is you never know what muppet you'll get as a LL and when you'll be asked to move out.

While this sounds incredibly smug, it's not meant to, it's actually the renters, in the main, paying for the mistakes, including mine, of the crash - so yet another reason not to be renting. (Not sure if that sentence could have more clauses in it :pac:)

Archaeoliz

gaius c wrote: »

His point is that if mortgage interest is higher than rent (as it was towards the latter years of the bubble), you are probably losing out even allowing for having an asset at the end of the mortgage term.

Whether that's applicable right now is doubtful though.

Ok, I see the point in certain economic circumstances but would tend to disagree when talking about more prevalent economic conditions because that asset of a house has more than financial value because it's a home, and mortgage payments have a finite time-scale. Potentially with rent you would always have to pay and the value is only realised when you sell, so could be rent free and recouping the cost of the interest payments after the mortgage expires.

Edit: MarkAnthony puts it better, so what he said +1.

Dee24

gaius c wrote: »

Sorry to hear of your situation.
Is there any way you could offload the original property? Unfortunately, until you get rid of that, it will seriously compromise what a bank can offer you.

Thanks gaius c. Unfortunately not - we paid 320k for that house, with the full intention of having it as our family home and never moving. However, we just didnt see my husband getting let go, and the local economy being hit so hard (the county we were living in, was one of the worst hit with the recession in the country ). So that house is now only worth €160k. So no matter what, we're in too much negative equity to try and sell. The outstanding mortgage on that house is €250k

To be honest, we can afford to pay rent, the car loan and the mortgage as we are now. So what we want to do is hold onto that house, and put it towards our pension once we have it paid off (and maybe even start paying a little extra on top of the mortgage repayments so its paid off early).

But I can completely understand why the bank is now stress testing us so heavily. Which to be honest is great to see that they are being prudent. We're not looking for a massive amount either. Just enough to buy a house that we can live in for the rest of our lives and have maybe 2 kids in. So max €250-€275k.

I suppose I had just thought we were in a slightly stronger position than I realised. Because we are comfortable paying what we are at present in outgoings, and because we pretty much have our 20% deposit ready to go.

OfflerCrocGod

Archaeoliz wrote: »

I don't see the logic?
Mortage = repayment of loan plus interest,
Rent = repayment of someone else's loan plus their interest.

At the end of the mortgage term, when I have it paid off I get to keep the house. Which I paid for. Don't get to keep the house no matter how long I stay in it when I rent.

I think I've been misunderstood. Interest can add up to about 10 to 15 years of renting and I would equate the two because you are paying for a service with both (a loan of money or a house). You aren't getting back your interest just like you aren't getting back your rent. I just wish more people would acknowledge that you also throw money away when taking out a loan and not just when renting.

alastair

OfflerCrocGod wrote: »

You aren't getting back your interest just like you aren't getting back your rent.

It's entirely feasible to reel back your interest costs by overpayments. Not quite so handy with rent. Of course you can fritter money away in any purchase, but the asset you hold at the end of the day will (if not always, at least generally) will trump the renting game.

Interest costs equivalent to 10 to 15 years of rent implies some mega length mortgage on a very costly property, and some remarkably cheap rent. So not really comparing like with like.

Archaeoliz

OfflerCrocGod wrote: »

I think I've been misunderstood. Interest can add up to about 10 to 15 years of renting and I would equate the two because you are paying for a service with both (a loan of money or a house). You aren't getting back your interest just like you aren't getting back your rent. I just wish more people would acknowledge that you also throw money away when taking out a loan and not just when renting.

I do see your point but I disagree with the differences in value of paying rent and paying mortgage interest. Yes, both interest and rent are 'dead money'. There's joint ownership with a mortgage, but ownership is never yours when you rent, so I see that as added value.

gaius c

Dee24 wrote: »

Thanks gaius c. Unfortunately not - we paid 320k for that house, with the full intention of having it as our family home and never moving. However, we just didnt see my husband getting let go, and the local economy being hit so hard (the county we were living in, was one of the worst hit with the recession in the country ). So that house is now only worth €160k. So no matter what, we're in too much negative equity to try and sell. The outstanding mortgage on that house is €250k

To be honest, we can afford to pay rent, the car loan and the mortgage as we are now. So what we want to do is hold onto that house, and put it towards our pension once we have it paid off (and maybe even start paying a little extra on top of the mortgage repayments so its paid off early).

But I can completely understand why the bank is now stress testing us so heavily. Which to be honest is great to see that they are being prudent. We're not looking for a massive amount either. Just enough to buy a house that we can live in for the rest of our lives and have maybe 2 kids in. So max €250-€275k.

I suppose I had just thought we were in a slightly stronger position than I realised. Because we are comfortable paying what we are at present in outgoings, and because we pretty much have our 20% deposit ready to go.

Are you on a tracker? If not, you should probably use your saved cash to pay down some of the mortgage. You're not making any interest on the cash and you're paying interest on the mortgage.

If you are on a tracker, you're best off to save more and try to do a deal with the bank re early repayment of the tracker.

gaius c

MarkAnthony wrote: »

Even those of us that got royally bent over and... anyway... ended up winning over rents during the last bubble because of trackers. We lost heavily due to neg equity but I type this in my 3 bed semi that I bought despite that so there is light at the end of the tunnel.

The massive issue with renting is you never know what muppet you'll get as a LL and when you'll be asked to move out.

While this sounds incredibly smug, it's not meant to, it's actually the renters, in the main, paying for the mistakes, including mine, of the crash - so yet another reason not to be renting. (Not sure if that sentence could have more clauses in it :pac:)

That's an extremely one-sided view.
Rent works for some. Buying works for others.
Pretending that buying is always superior to renting is the sort of thinking that helped supercharge the bubble we had.
For one, you're ignoring how tying yourself down limits mobility for work, etc.

gosplan

gaius c wrote: »

That's an extremely one-sided view.
Rent works for some. Buying works for others.
Pretending that buying is always superior to renting is the sort of thinking that helped supercharge the bubble we had.
For one, you're ignoring how tying yourself down limits mobility for work, etc.

This is really true.

By sheer luck a sale we agreed in 2007 fell through and we've been renting ever since. I didn't even really like the house.

All the pressure to buy came from the national mantra 'you must own your own property - rent is dead money'

The same mantra convinced everyone that one bed apts were a good way onto the property ladder.

MarkAnthony

gaius c wrote: »

That's an extremely one-sided view.
Rent works for some. Buying works for others.
Pretending that buying is always superior to renting is the sort of thinking that helped supercharge the bubble we had.
For one, you're ignoring how tying yourself down limits mobility for work, etc.

Not at all, I've always said (and posted) that there is a small contingent of people that would be better of renting. They should be getting superior properties that are well managed. There should also be the option for people to rent long term in f unfurnished properties, so long as this is cheaper each month than a mortgage.

However what supercharged the bubble wasn't owner occupiers looking to buy it was speculators looking to get rich. Unfortunately with the numbers willing to rent this fed into that and they found tenants.

With a finite supply and a settled population buying is always superior to renting for everyone except landlords. Renters are paying for the bubble in the main not owners.

MarkAnthony

gosplan wrote: »

This is really true.

By sheer luck a sale we agreed in 2007 fell through and we've been renting ever since. I didn't even really like the house.

All the pressure to buy came from the national mantra 'you must own your own property - rent is dead money'

The same mantra convinced everyone that one bed apts were a good way onto the property ladder.

Mine didn't fall through in 2006. I had been brought up on the property ladder game in a different country and I didn't anticipate the bubble properly. Dublin is a capital city after all and one would expect property to be expensive at it's centre. The plan was always to keep the property anyway and rent it out. We did end up staying a couple of years longer than we wanted however we were paying €550 in a mortgage rather than €1000+ in rent, we never had to worry about the LL not paying the mortgage and being evicted. We put in the appliances and furniture + kitchen and bathroom we wanted. We saved, got a deposit together and bought a house, and now someone else is paying our mortgage on that property.

While I'm not suggesting doing that was for everybody, or indeed that poor decisions weren't made, especially with property that wasn't going to rent well in the future not everyone who bought in the bubble was fooked.

sapper

Is there standard formula for a basic comparison between renting and buying? Im currently renting, having sold recently and looking to buy and I am wondering how much of the rent I am paying is "dead money". Any dead money is therefore an additional cost of my intended purchase whenever that happens.

Say my mortgage on my old house was EUR1000, at the time of selling say EUR300 principal and EUR700 interest ,and then I rent a house the same size,spec and standard across the road for EUR1,000.

If the value of my old house stays flat while I rent, then I'm losing EUR300 a month by spending my EUR1000 by giving it to my landlord instead of paying EUR300 towards the deeds of my old house

But say over the course of the next 12 months, the value of my old house drops by EUR5,000, havent I made money by renting (ie EUR5000 vs EUR300x12=EUR3600)?

Dee24

gaius c wrote: »

Are you on a tracker? If not, you should probably use your saved cash to pay down some of the mortgage. You're not making any interest on the cash and you're paying interest on the mortgage.

If you are on a tracker, you're best off to save more and try to do a deal with the bank re early repayment of the tracker.

Yeah we are on a tracker. Our interest rate is 1.15%. However they did say yesterday there's a possibility they could take the tracker off us as that house is no longer our primary residence. But hopefully it won't come to that. Also they were stress testing us on our existing mortgage up to 6.55%.

Just posting the feedback as it may help others out who is in a similar position to us.

El_Dangeroso

sapper wrote: »

Is there standard formula for a basic comparison between renting and buying? Im currently renting, having sold recently and looking to buy and I am wondering how much of the rent I am paying is "dead money". Any dead money is therefore an additional cost of my intended purchase whenever that happens.

Say my mortgage on my old house was EUR1000, at the time of selling say EUR300 principal and EUR700 interest ,and then I rent a house the same size,spec and standard across the road for EUR1,000.

If the value of my old house stays flat while I rent, then I'm losing EUR300 a month by spending my EUR1000 by giving it to my landlord instead of paying EUR300 towards the deeds of my old house

But say over the course of the next 12 months, the value of my old house drops by EUR5,000, havent I made money by renting (ie EUR5000 vs EUR300x12=EUR3600)?

I don't know if there's one for exactly what you require, but this is a good calculator:
http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

Just menatally replace $ with €

Floodzie

Dee24 wrote: »

Yeah we are on a tracker. Our interest rate is 1.15%. However they did say yesterday there's a possibility they could take the tracker off us as that house is no longer our primary residence.

Unfortunately you will no longer be under the Code for Mortgage Arrears if you own another property, as your original home will now be considered a buy-to-let. And you can bet your bottom euro that you will lose your tracker or at the very least be on a tracker at a higher rate.

It is possible that you could put the new home in your partner's name, and the original property in yours. Not sure how iffy that is though.

Villa05

sapper wrote:

Is there standard formula for a basic comparison between renting and buying? Im currently renting, having sold recently and looking to buy and I am wondering how much of the rent I am paying is "dead money". Any dead money is therefore an additional cost of my intended purchase whenever that happens.

Try ronan Lyonshall blog. I think he had attempted a calculator

Bob24

gaius c wrote: »

That's an extremely one-sided view.
Rent works for some. Buying works for others.
Pretending that buying is always superior to renting is the sort of thinking that helped supercharge the bubble we had.
For one, you're ignoring how tying yourself down limits mobility for work, etc.

I would say the only cases where renting is superior is if something is preventing you from buying (you can't afford buying, you can't commit to a particular location for several year, you only need a small place in the short term but know you will have to get something larger within a couple of years, etcs).

Once you are able and ready to commit to a particular property for a long enough period, there are very few reasons to rent as in this country renting is actually a very large risk to someone who wants stability.

This is different from many European countries where renting can be seen as more practical and cost effective than buying to a number of people who have a choice between both options.

I would absolutely agree when you say the idea that buying is "always superior to renting is the sort of thinking that helped supercharge the bubble we had."

But on the other end - they is no denying that in Ireland there is more truth in way of thinking than in most other European countries.

MarkAnthony

<MOD SNIP>

Meh I'm from Oxfordshire and I have it better here than my brother does. There are huge similarities between the two cities in terms of issues but wages are way higher here and propety prices are, in the main, lower.

I got caught with neg equity but I'm happy out over all.

athtrasna

Villa05, please do not post generalised negativity that makes no contribution to this thread.

Mod

All is calm at the moment, if my daft/myhome alerts are anything to go by. A lot of new supply came to the commuter-belt towns I follow around May and June but not much lately.

However, a fair number of those houses are still there - some sitting on the market for quite a while. I passed the window of a local estate agent and a couple of places are marked sale agreed but have not yet been taken off Daft (or marked sale agreed on the site).

Maybe the current supply will slowly be picked off in the coming months. If not, when new supply starts coming on in the autumn there will be a lot to choose from.

Maybe the Central Bank regulations are finally starting to have an impact?

barca_123

Is it true that a good few properties will come up post summer around Sept? Whats it been like in previous years?

I believe the summer is a slow time for buying / selling. I'm keeping an eye on daft / myhome and not much lately.

Thanks,

Michael D Not Higgins

barca_123 wrote: »

Is it true that a good few properties will come up post summer around Sept? Whats it been like in previous years?

I believe the summer is a slow time for buying / selling. I'm keeping an eye on daft / myhome and not much lately.

Thanks,

Christmas is the usual lull. Summer is usually the busiest time to move.