Property Market 2016

johnp001

Rew wrote: »

Like I said I hope they take a long hard look at what they are asking. Credit is restricted with the goal to deflate prices which is happening. So the rules are having the intended affect, I wouldn't be gambling on much in the way of a change post review but thats just me.

Just a clarification on the Central Bank remit here as opposed to a "goal of deflating prices"

Central Bank wrote:

property market policy ... is outside the remit of the Central Bank, we are the supervisor of the Irish financial system and, as the designated macroprudential authority for Ireland, we have a key responsibility to maintain financial stability in Ireland.

from
Opening address by Chief Economist, Gabriel Fagan, to the 2nd Sunday Business Post Property Summit ,1 December 2015

I certainly agree that the Central bank would be unlikely to want to change anything as the result of any review in the near future though.

Rew

johnp001 wrote: »

Just a clarification on the Central Bank remit here as opposed to a "goal of deflating prices"

from
Opening address by Chief Economist, Gabriel Fagan, to the 2nd Sunday Business Post Property Summit ,1 December 2015

I certainly agree that the Central bank would be unlikely to want to change anything as the result of any review in the near future though.

Fair point and I am putting some words in their mouth the specific goal of the rules is:

The key objective of these regulations is to increase the resilience of the banking and household
sectors to the property market and to reduce the risk of bank credit and house price spirals from
developing in the future.

And my interpretation of that is deflating the market to a point where we see much more stable growth (i.e. not 80% of the ludicrous peak prices that were heading back for 100% rapidly)

Bob24

Rew wrote: »

Fair point and I am putting some words in their mouth the specific goal of the rules is:

To be fair it is not only you - the media keep saying this and when it suits they conveniently forget to remind people the CBI's mandate is to protect the financial system (if things blow-up however, they will be happy to point and the CBI and say they didn't regulate the banks properly).

handlemaster

Looking like FF will have some say in how things go from here ... What is their current thinking on the property market etc ? I havent heard much from them on it

bettytobe

The_Conductor wrote: »

The only sellers who are actually selling- are those who are desperate.
Most sellers have put off selling until later in the year- or 2017- when they expect a relaxation of the Central Bank rules to provide firm underpinnings to the market. Unfortunately the commentary from the Central Bank- on how they plan to evaluate how the deposit rules are working later this year- has had a chilling effect on the market.

We are specifically looking at the SCD market at the moment, i must say there doesnt seem to be too much movement on the current stock, i wonder if Dublin prices continue on their 1% average downward trajectory will it mean those who are waiting till 2017 to sell will see a reduction of 10-15% on asking prices? Obviously noone can predict with certainty and many factors will come into play, new builds etc but there does seem to be a standoff between us buyers with the limited credit available and trying to save for colossal deposits and the expectations that sellers have on the value of their properties - just personal observation

SarahMollie

bettytobe wrote: »

We are specifically looking at the SCD market at the moment, i must say there doesnt seem to be too much movement on the current stock, i wonder if Dublin prices continue on their 1% average downward trajectory will it mean those who are waiting till 2017 to sell will see a reduction of 10-15% on asking prices? Obviously noone can predict with certainty and many factors will come into play, new builds etc but there does seem to be a standoff between us buyers with the limited credit available and trying to save for colossal deposits and the expectations that sellers have on the value of their properties - just personal observation

I just can't see massive reductions in SCD. The demand is still too high, even if its talking people longer to save for their deposits.

If anything I think there is a bit standoff between buyers and sellers.

PhoenixParker

I think there's a lag in the market above E300K due to the new rules.

Previously everyone needed 10% now anything over E220k needs a 20% deposit (first time buyer or otherwise). That's 18K more in a deposit on a 400K house if you're a first time buyer and 40K more for everyone else. There's been an activity pause where those who didn't make it through before the gates slammed shut are saving in the background.

By the end of the year a more normal market will start to emerge.

The Mulk

SarahMollie wrote: »

I just can't see massive reductions in SCD. The demand is still too high, even if its talking people longer to save for their deposits.

If anything I think there is a bit standoff between buyers and sellers.

I think it's a question of who's going to blink first.
A lot of people looking to trade up are going to be giving up trackers so may be reluctant to sell too low

Rew

Supply of people who can afford the majority houses in SCD at current prices with the current rules questionable. Demand may be high but ability is another thing.

SarahMollie

Rew wrote: »

Supply of people who can afford the majority houses in SCD at current prices with the current rules questionable. Demand may be high but ability is another thing.

Yes, but I think this will cause delay rather than a substantial price drop.

There are many people in that area who simply won't look anywhere else and will do whatever it takes to buy somewhere, even if it takes them longer than anticipated.

Admittedly this is anecdotal, but most of my friendship group (30-33 age range) are all looking at buying. All but one (his wife is from the northside so they're moving closer to her family) are resolutely sticking to their SCD aspirations, no matter how long it takes them.

Also, if you look at the other market forces, such as rising cost of rent, rising employment, and rising population combined with very little supply. Nothing points to a price fall.

lcwill

The_Conductor wrote: »

The only sellers who are actually selling- are those who are desperate.
Most sellers have put off selling until later in the year- or 2017- when they expect a relaxation of the Central Bank rules to provide firm underpinnings to the market. Unfortunately the commentary from the Central Bank- on how they plan to evaluate how the deposit rules are working later this year- has had a chilling effect on the market.

2017-2018 could be a brief window of price increases. From December 2018 there will be a lot of people selling houses they bought during the period of capital gains tax exemption during 2011 to 2014 as the 7 year holding period will have finished. It will be interesting to see if this has a strong effect on prices.

gaius c

PhoenixParker wrote: »

I think there's a lag in the market above E300K due to the new rules.

Previously everyone needed 10% now anything over E220k needs a 20% deposit (first time buyer or otherwise). That's 18K more in a deposit on a 400K house if you're a first time buyer and 40K more for everyone else. There's been an activity pause where those who didn't make it through before the gates slammed shut are saving in the background.

By the end of the year a more normal market will start to emerge.

It's killed the second hand market dead because with already low transaction volumes, selling your place to provide the deposit for the new house is much more difficult.

johnp001

lcwill wrote: »

2017-2018 could be a brief window of price increases. From December 2018 there will be a lot of people selling houses they bought during the period of capital gains tax exemption during 2011 to 2014 as the 7 year holding period will have finished. It will be interesting to see if this has a strong effect on prices.

Good point but if there seems to be little hope of any meaningful gains (or the possibility of losses) so that the CGT exemption is irrelevant for an individual's or institution's property investment portfolio there will be a big incentive to get out ahead of the crowd on the basis that there are other sellers about to flood the market.
The exemption becomes negated if the property is held beyond the 7 year mark.

Rew

SarahMollie wrote: »

Yes, but I think this will cause delay rather than a substantial price drop.

There are many people in that area who simply won't look anywhere else and will do whatever it takes to buy somewhere, even if it takes them longer than anticipated.

Admittedly this is anecdotal, but most of my friendship group (30-33 age range) are all looking at buying. All but one (his wife is from the northside so they're moving closer to her family) are resolutely sticking to their SCD aspirations, no matter how long it takes them.

Also, if you look at the other market forces, such as rising cost of rent, rising employment, and rising population combined with very little supply. Nothing points to a price fall.

I would have said the average house in SCD that a 30-33 year old wants is probably 500k (its just a guess so open to suggestion). Assuming its a trade up thats 100k deposit (though FTB exemption doesn't dent that deposit much) and 400k mortgage. 400k mortgage needs a gross combined salary of 114k to get. They need another ~8-10k for expenses and all that assumes no debt or dependents that reduce their borrowing capacity.

All that and will 500k likely get a house thats got a poor BER and in need of other modernisation.

Now thats all made up but how far from the truth is it?

How many people/couples are grossing 115k with 100k in the bank?

MAJJ

Rew wrote: »

I would have said the average house in SCD that a 30-33 year old wants is probably 500k (its just a guess so open to suggestion). Assuming its a trade up thats 100k deposit (though FTB exemption doesn't dent that deposit much) and 400k mortgage. 400k mortgage needs a gross combined salary of 114k to get. They need another ~8-10k for expenses and all that assumes no debt or dependents that reduce their borrowing capacity.

All that and will 500k likely get a house thats got a poor BER and in need of other modernisation.

Now thats all made up but how far from the truth is it?
How many people/couples are grossing 115k with 100k in the bank?

Think you're very close with the above and that is the key, not many with that criteria, also if trading many would be because of kids, hence more costs.

The_Conductor

In all honesty- anyone holding out for a splash of properties hitting the market with the elapse of the CGT exemption- really is clutching at straws.

Of far more immediate interest- the Eurozone slipped back into deflation last month- and this is up for discussion at the next ECB meeting. The QE thus far is seen as having been ineffectual, and, it is thought, more direct measures may be next on the cards..........

In an Irish context- where we are paying fully 200 basis points more than other ECB countries for our mortgages- even more direct measures may only have limited impact- unless there is some sort of pressure brought to bear on the market participants to pass the savings onwards.

At the moment- we have had a small temporary spike in our sovereign debt interest rates- as a result of our election mess. Its only small though- in the region of 0.1% (aka bringing our 10 year borrowing costs to around 1%.........)

The average Irish person walking down the street has not seen the effects of any 'recovery'- and is continuing to pay down debt, rather than spend. Until such time as policies kick in which reverse this trend- things aren't going to change..........

Cuddlesworth

Rew wrote: »

How many people/couples are grossing 115k with 100k in the bank?

More then I would have thought 5 years ago, people in Dublin simply earn more. 100k is very achievable, both in terms of combined income and deposit. I just think that when you have that sort of money saved up and its money you fought hard for, your a little more critical on how you spend it.

bettytobe

Cuddlesworth wrote: »

More then I would have thought 5 years ago, people in Dublin simply earn more. 100k is very achievable, both in terms of combined income and deposit. I just think that when you have that sort of money saved up and its money you fought hard for, your a little more critical on how you spend it.

Agree with the point re comined income, even single income in excess of 100k, however think about how long it would take you to save 100k deposit with the cost of living in this country, throw a couple of kids in the mix and its very limiting, (unless you bought/sold at the right time or bank of mom and dad) i think the point is you need to have both of these boxes ticked to buy a bottom of the ladder family house in SCD that will prob need upgrading, somethings got to give and i doubt it will be the cb rules

Inspector Coptoor

Rew wrote: »

I would have said the average house in SCD that a 30-33 year old wants is probably 500k (its just a guess so open to suggestion). Assuming its a trade up thats 100k deposit (though FTB exemption doesn't dent that deposit much) and 400k mortgage. 400k mortgage needs a gross combined salary of 114k to get. They need another ~8-10k for expenses and all that assumes no debt or dependents that reduce their borrowing capacity.

All that and will 500k likely get a house thats got a poor BER and in need of other modernisation.

Now thats all made up but how far from the truth is it?

How many people/couples are grossing 115k with 100k in the bank?

You're not far off the mark there at all.

Wife and I are 32 and 31.
Just bought a 4 bed end of terrace in Deansgrange, Blackrock for 430k, 86k deposit and another 8k in fees.

Mortgage of 344k.

Combined basic income of ~100k rising to 130k a year with overtime and allowances.

Hard slog to save that kind of cash but well worth it when we move in at end of the week.

Cuddlesworth

bettytobe wrote: »

Agree with the point re comined income, even single income in excess of 100k, however think about how long it would take you to save 100k deposit with the cost of living in this country, throw a couple of kids in the mix and its very limiting, (unless you bought/sold at the right time or bank of mom and dad) i think the point is you need to have both of these boxes ticked to buy a bottom of the ladder family house in SCD that will prob need upgrading, somethings got to give and i doubt it will be the cb rules

Bit patronising? Combined 100k base is 6k a month after tax. Without kids, its pretty easy to save upwards of 30k a year, even with Dublin rents. You throw in living with parents or renting far out for a while and you can get that to 40/45k a year. The people I know with good jobs and relationships are not having kids, but even with kids it just takes a little while longer. I'm 31 and I can tell you now that a 100k deposit is very achievable.

bettytobe

Cuddlesworth wrote: »

Bit patronising? Combined 100k base is 6k a month after tax. Without kids, its pretty easy to save upwards of 30k a year, even with Dublin rents. You throw in living with parents or renting far out for a while and you can get that to 40/45k a year. The people I know with good jobs and relationships are not having kids, but even with kids it just takes a little while longer. I'm 31 and I can tell you now that a 100k deposit is very achievable.

Dont see how you read it as patronising, my husband and i have good combined earnings however we have two children, obv renting far out isint an option when your kids are in schools, hence moving home to parents is not an option, i was simply pointing out how long that saving in excess of 100k for the purpose of purchasing a family home would take with cost of living ie rent, food, utilities, car etc even by your timeline it would be a minimum of three years to do this

johnp001

The_Conductor wrote: »

In all honesty- anyone holding out for a splash of properties hitting the market with the elapse of the CGT exemption- really is clutching at straws.

Of far more immediate interest- the Eurozone slipped back into deflation last month- and this is up for discussion at the next ECB meeting. The QE thus far is seen as having been ineffectual, and, it is thought, more direct measures may be next on the cards..........

In an Irish context- where we are paying fully 200 basis points more than other ECB countries for our mortgages- even more direct measures may only have limited impact- unless there is some sort of pressure brought to bear on the market participants to pass the savings onwards.

At the moment- we have had a small temporary spike in our sovereign debt interest rates- as a result of our election mess. Its only small though- in the region of 0.1% (aka bringing our 10 year borrowing costs to around 1%.........)

The average Irish person walking down the street has not seen the effects of any 'recovery'- and is continuing to pay down debt, rather than spend. Until such time as policies kick in which reverse this trend- things aren't going to change..........

What sort of more direct measures than QE are you predicting may be on the cards? Helicopter money?
A sufficiently deluded government could possibly co-erce a largely state owned banking sector to reduce SVR's in order to increase the transfer of wealth from taxpayer to non-paying mortgage holder but such a measure would only be very temporary as no institution will ever want to "compete" in the Irish mortgage market while the security on housing loan is completely unenforcable.
The average Irish person is, for example, significantly more likely to be employed than he was 5 years ago. That is surely a 'recovery'?
Zero/negative interest rate policy is the most extreme incentive not to pay down debt that has ever been implemented. What policies do you envisage that would go further down this road?

Rew

Cuddlesworth wrote: »

More then I would have thought 5 years ago, people in Dublin simply earn more. 100k is very achievable, both in terms of combined income and deposit. I just think that when you have that sort of money saved up and its money you fought hard for, your a little more critical on how you spend it.

Combined income sure its not uncommon, savings and ability to save is a whole other thing though. Even if they don't have kids/child care they have rent/mortgage, car loans or debits. Saving that much will take a while and a lot of sacrifice (more then some realise I think). Im in the market for a family house as are friends and work colleagues, but I know from talking to them that the deposits are long ways off for them even with good salaries as much as I know how far it is for us.

I totally agree that people who do save the 100k+ will be much, much more critical about where they spend it and crap BER rated houses that need modernisation wont do as well as other houses.

Sleepy

We were with a mortgage advisor last night who said he's seen a doubling of the number of applicants since the start of the year.

The_Conductor

Sleepy wrote: »

We were with a mortgage advisor last night who said he's seen a doubling of the number of applicants since the start of the year.

Central bank figures show less than 1000 mortgages were approved nationally in the month of January. This does not tally with what your mortgage advisor has been telling you.

Bob24

The_Conductor wrote: »

Central bank figures show less than 1000 mortgages were approved nationally in the month of January. This does not tally with what your mortgage advisor has been telling you.

Maybe the mortgage advisor (as the whole property sector) is carefully choosing words to give misleading information without actually lying.

Double the number of applicants doesn't necessarily mean double the number of approvals.

Sleepy

The_Conductor wrote: »

Central bank figures show less than 1000 mortgages were approved nationally in the month of January. This does not tally with what your mortgage advisor has been telling you.

Approved or drawn down?

With the current shortage of supply I can certainly see the possibility for an increase in those getting approval in principle without any corresponding increase in sales being closed...

SarahMollie

Rew wrote: »

I would have said the average house in SCD that a 30-33 year old wants is probably 500k (its just a guess so open to suggestion). Assuming its a trade up thats 100k deposit (though FTB exemption doesn't dent that deposit much) and 400k mortgage. 400k mortgage needs a gross combined salary of 114k to get. They need another ~8-10k for expenses and all that assumes no debt or dependents that reduce their borrowing capacity.

All that and will 500k likely get a house thats got a poor BER and in need of other modernisation.

Now thats all made up but how far from the truth is it?

How many people/couples are grossing 115k with 100k in the bank?

Well this isnt relevant to me because I already own a place in my own right and won't be moving again for a few years but if my BF and I decided to buy together in the morning, we wouldn't be too far off. We would have the income comfortably and maybe just need to save for 6-12 months.

I know plenty like us. Its really not impossible for Dublin based couples with professional jobs.

TOEJOE

Its interesting reading this thread , the sympathy I have is for the young couple living in Dublin with say a combined income of 60k.
There only chance of getting a house is to live with parents or possible rent, (have children) and the look for social housing.

PhoenixParker

Sleepy wrote: »

Approved or drawn down?

With the current shortage of supply I can certainly see the possibility for an increase in those getting approval in principle without any corresponding increase in sales being closed...

Even if the CB figures only refer to "approved" they could well be correct and still in line with the mortgage brokers comments. We applied for our mortgage in the first week of January and got approval in the second week of February. It was a straightforward application with only four easy to gather missing pieces of information.

January applications could be up massively without affecting January approvals. January approvals would be the result of December applications and many people (including ourselves) ready in December would have waited til the New Year to apply. The mortgage approval centres are basically closed from the 23rd December, people were waiting for exemptions to be available again in the new year before applying and few people start house hunting/go sale agreed in December.