Property Market 2015

johnp001

Deleted User wrote: »

Hard to know what to take from that. On the one hand, a drop in earnings obviously means less money in the economy and, presumably, less cash for buying houses. On the other hand, I'd prefer if there was more activity in the construction sector - if they don't build more houses the supply problem will not be fixed!

I guess it's not a measure of activity in construction. Just that the hourly earnings in the construction sector has decreased. The implication is that the same amount of € buys more construction work

gaius c

There's more people in employment but the wages for new entrants are lower and static for those already in the workforce so the average is coming down.

johnp001

gaius c wrote: »

There's more people in employment but the wages for new entrants are lower and static for those already in the workforce so the average is coming down.

Another interesting piece on employment recovery from Seamus Coffey
Recovery in employment continues

Generally the headline figures are pretty positive.
One worrying measure though was the number of part-time workers who describe themselves as "under-employed" which has increased.
If employment is recovering across the board hopefully an increase in average earnings (and more importantly median earnings) will be seen in the near future.
If increased employment does not translate in higher average earnings and higher average earnings do not translate into increased median earnings then affordability for those entering the housing market is unlikely to improve.

johnp001

Cairn Homes ready to spend €120m on development sites

Overseas developers set to pump €1.5bn into apartment construction

johnp001

Irish owners at risk of losing thousands on properties abroad

Property and mortgage pundit, Karl Deeter, said: "As we found out ourselves, the sort of soft landings of the sort being talked about in Australia at the moment just don't happen. Every economy, no matter how different they do things, is subject to the property cycle.
"I'd advise those people who own properties in countries which are believed to be at the top of the cycle to do their homework and perhaps consider selling up, buying with cash in Ireland and continuing to rent where they are living. But only after doing their homework."

I would have thought this applied to Ireland too...

helimachoptor

helimachoptor wrote: »

signed for our house yesterday, closing friday 3 weeks.

Has been a frustrating experience with BOI tbh, constant moving goalposts, new copies of everything each month even though they are delaying things but almost there.

Now once we get in, 2 months of renovation work :eek:

so.. last week a call from the vendors solicitor to say he is going on hols this friday for 3 weeks so funds need to be in a week early or we dont get the kids til October, no issue from our side.

Today, cert of exemption arrives for 15 q metre utility.. basically saying it doesnt comply with planning but has been there so long its fine.

However bank wont release the funds, our solicitor has proposed a couple of options but ultimately with the vendors guy being away it wont be moving quickly

johnp001

Builders of one-off homes can opt out of regulations from Tuesday

johnp001

<snip>

I think this is more a change in the statutory certification requirements (which could be seen as a bit onerous on small projects) rather than a change in the building standards required by regulation.

farrerg

johnp001 wrote: »

I think this is more a change in the statutory certification requirements (which could be seen as a bit onerous on small projects) rather than a change in the building standards required by regulation.

I know someone starting a build shortly and this will save them a small fortune, they intend to build to a very high standard but the cost of all of the reports and certifications was crazy. Most of the regulations are rightly meant to prevent shoddy developments like priory hall happening again, but were proportionally working out at too significant a cost for a one off build and a bit OTT

Balmed Out

<snip>
The poor builds have tended not to be by people who build a one off with the intention of living there themselves its larger developments as well as the small builder who does one house sells it and then another - hopefully they wont be exempt.

SSLguru

Anywhere I look in Dublin ( bar a few up market locations ) they are all dropping their asking price, especially in north Dublin and some areas on the southside.


Somethings got to give as the vast majority I have been looking at are on the market for nearly a year.


Crash is coming within the next 2 years hold onto your deposits and prepare yourselves accordingly.

Bob24

SSLguru wrote: »

Anywhere I look in Dublin ( bar a few up market locations ) they are all dropping their asking price, especially in north Dublin and some areas on the southside.


Somethings got to give as the vast majority I have been looking at are on the market for nearly a year.


Crash is coming within the next 2 years hold onto your deposits and prepare yourselves accordingly.

I don't know about that ... conflicting forces are each pushing in their own directions.

The CBI regulations seem to have applied a strong enough downwards pressure in Dublin ... but if nothing is done to address the lack of rental accommodation and new builds, I don't know whether it will be enough to counter upwards pressure and I don't see how there can be a property crash (unless the whole economy is crashing of course).

SSLguru

Very true bob but Something has got to give and people are forgetting about the elephant in the room ( 0 % interest rates ) are going to inevitably rise and that will be a whole different ball game.

koheim

SSLguru wrote: »

Very true bob but Something has got to give and people are forgetting about the elephant in the room ( 0 % interest rates ) are going to inevitably rise and that will be a whole different ball game.

Irish banks are currently charging 100% more than the average in Europe, so the only way interest rates are going is down...and cheaper credit will lead to...

gosplan

It's tough to call. Autumn will tell us a lot.

The overpriced houses will all come down because the CB took the heat from the market.

But cheap houses will be in demand.

I think until we find out what the true market is like, speaking of one single market progressing makes no sense.

Realistically priced houses will continue to sell I'd say.

Johngoose

I think that the Chinese stock market crash will affect the whole world and will have a domino affect. America already seems to be rattled by it.The European stock markets seem to be jittery.Ireland the fastest growing economy in Europe?-That phrase is even laughable when you say it out loud.

sami2015

koheim wrote: »

Irish banks are currently charging 100% more than the average in Europe, so the only way interest rates are going is down...and cheaper credit will lead to...

Are they charging all their customers 100% more than the average in Europe? I think tracker mortgages are certainly not 100%. Not sure what the actual breakdown in each category is.

koheim

sami2015 wrote: »

Are they charging all their customers 100% more than the average in Europe? I think tracker mortgages are certainly not 100%. Not sure what the actual breakdown in each category is.

For new mortgages this is the case. Tracker mortgages are not offered anymore!

johnp001

Johngoose wrote: »

I think that the Chinese stock market crash will affect the whole world and will have a domino affect. America already seems to be rattled by it.The European stock markets seem to be jittery.Ireland the fastest growing economy in Europe?-That phrase is even laughable when you say it out loud.

Irish Times article quoting former IMF chief economist Oliver Blanchard agrees:
John FitzGerald: Revised CSO figures are a dose of reality on deficit

Further analysis from Seamus Coffey here:
Ireland’s Vanishing Current Account Surplus

Bob24

sami2015 wrote: »

Are they charging all their customers 100% more than the average in Europe? I think tracker mortgages are certainly not 100%. Not sure what the actual breakdown in each category is.

Tracker mortgages Are only for borrowers who got mortgages up to 7-8 years ago. Mortgages offered today are all at rates which are much higher than EZ average (partly because banks are using them to offset the money they are not making in trackers).

If trackers go up, it won't apply any downwards pressure on the market as they are only for people who already own property, not prospective buyers (unless you assume higher rates will force a massive number of household Le to go into arrears and seek their property or have it repossessed, but I wouldn't think so).

Lastly, given the state of the world economy, I don't see the ECB drastically increasing its rates anytime soon anyway. If I had a tracker mortgage I would feel pretty comfortable about it.

tinkerbell

Bob24 wrote: »

Tracker mortgages Are only for borrowers who got mortgages up to 7-8 years ago. Mortgages offered today are all at rates which are much higher than EZ average (partly because banks are using them to offset the money they are not making in trackers).

No, it's because the banks are hugely restricted in terms of repossessing (compared to other EU banks) when mortgages fall into arrears. That's why variable rates are so high.

Bob24

tinkerbell wrote: »

No, it's because the banks are hugely restricted in terms of repossessing (compared to other EU banks) when mortgages fall into arrears. That's why variable rates are so high.

Why should there only be one reason for higher rates?

Restrictions with repossessions (and consequently high levels of arrears) are a big factor as well, but definitely not the only one.

The EU average rate for mortgages is 2% and tracker mortgages are 1% - http://www.rte.ie/news/business/2015/0814/721260-mortgage-interest-rates/

If I recall what I last read, Bank of Ireland's loan book includes roughly 50% of tracker mortgages, so it is clear that the other half must be above 2% if they want to have the same type of profits as other European banks.

zl1whqvjs75cdy

Did other EU countries offer tracker mortgages or was it only an Irish thing? You hear it trotted out as an excuse/reason for the high interest rates here quite a bit.

Bob24

donkeyoaty0099 wrote: »

Did other EU countries offer tracker mortgages or was it only an Irish thing? You hear it trotted out as an excuse/reason for the high interest rates here quite a bit.

I can only talk about France - but no tracker mortgages have been issued there, and there are not many variable rate mortgages for the matter. Most mortgages come with a fixed rate for their whole duration.

gaius c

Honohan stated last year in the Dail that trackers (that were being paid) were covering their costs and that the 100k+ mortgages in arrears were causing the high variable rates.
Of course, a big chunk of those arrears are also trackers.

It's the elephant in the room that nobody wants to deal with.

johnp001

gaius c wrote: »

Honohan stated last year in the Dail that trackers were covering their costs and that the 100k+ mortgages in arrears were causing the high variable rates.
Of course, a big chunk of those arrears are also trackers.

It's the elephant in the room that nobody wants to deal with.

International comparison of relative size of elephant.


Source:Mortgage Arrears in Ireland: Introducing
the Enhanced Quarterly Statistics

Bob24

gaius c wrote: »

Honohan stated last year in the Dail that trackers were covering their costs and that the 100k+ mortgages in arrears were causing the high variable rates.
Of course, a big chunk of those arrears are also trackers.

It's the elephant in the room that nobody wants to deal with.

Isn't it a bit misleading to say they are covering their cost and therefore have no impact though?

While a number of Irish banks have half their loans which are "covering their cost" (polite way of saying banks are not making profit on them), most European banks are making profits on pretty much their whole loan portfolio. Mechanically, this means if an Irish bank wants to absorb the same profit off their whole portfolio as an average European bank, they have to charge higher rates on the 50% of their portfolio over which they have control and are making money.

And yes, agreed the elephant in the room are bad performing loans.

gaius c

Bob24 wrote: »

Isn't it a bit misleading to say they are covering their cost and therefore have no impact though?

While a number of Irish banks have half their loans which are "covering their cost" (polite way of saying banks are not making profit on them), most European banks are making profits on pretty much their whole loan portfolio. Mechanically, this means if an Irish bank wants to absorb the same profit off their whole portfolio as an average European bank, they have to charge higher rates on the 50% of their portfolio over which they have control and are making money.

And yes, agreed the elephant in the room are bad performing loans.

The trouble is that various VI's are presenting the reason for high variables as being the trackers and nothing else. To counter this obvious agenda, emphasis needs to be put on highlighting the problem with mortgages that are not being paid at all. That's not to ignore the trackers but rather deal with the bigger problem first.

Both are a problem and standard variable rates are subsidising both but to different extents.

Bob24

gaius c wrote: »

Both are a problem and standard variable rates are subsidising both but to different extents.

Agreed with everything else you said, but on that last point I am honestly not sure anyone here knows the extend to which each problem is impacting the rates (and I am certainly not claiming I do).

Has any well documented analysis been published to support the fact that one cause has a clearly larger impact than the other? (not to mention other possible causes, such as the lack of competition in the Irish mortgage market)

I would definitely agree fixing the repossession process and the high number of bad performing loans is a much more important morale and systemic matter in the long term and should be a top priority. But if we are just talking short term impact on interest rates, I haven't seen anything telling me this is by far the main driver.

Rzeznik

donkeyoaty0099 wrote: »

Did other EU countries offer tracker mortgages or was it only an Irish thing? You hear it trotted out as an excuse/reason for the high interest rates here quite a bit.

In Poland, you have only tracker mortgages.