Property Market 2016

athtrasna

Property market 2016...

Cuddlesworth

Hollister11 wrote: »

I don't begrudge anyone making money.

I'm 20, so in the depts of the recession i was 15. But if i was 10/15 years older, I would of snapped up plenty of property, held them and sold them on.

There's 2 bed apartments where I live, right beside a train station. 5 0f them sold in 2011 for 80K, 3 similar are up for sale now for 190K, and 2 are up for rent for 1500 a month.

Rent wise that's a 22.5% ROI PER YEAR. That's incredible.
While sales wise that's a 57% ROI.

I'd say make what you can, don't let others people bad fortune put you off.

Lets say just over 200k. You have a deposit of 40k(no easy task) and a income of around 45k a year. That's a 20% deposit since its buy to let.

You buy the apartment. Your now no longer a first time buyer. All future government incentives probably no longer apply to you. Any further property is subject to 20$ deposit and the current load amount is taken into account.

Best rates for BTL I can see are roughly 4.8% over 20 years. So that's 1k a month subject to variable interest rates.

Your income at 45k is roughly 2800 after tax. That's before you consider anything else, like a pension, health insurance, BIK.

Your 1500 is subject to income tax at about 50%, so the years total of 18k ends up at 9k. Of that 9k,

You need to pay for landlords insurance at 250.
Property tax at 350.
Letting Fees, repairs, house renovation - I usually see a average cost of 1k a year per property by people that keep track.
Fees of 1k a year to the property management company.

Now at this point, you are earning roughly 6.5k a year and paying 12k a year in mortgage payments. Your down 5.5k a year or the equivalent of you having to earn 11k, thats 5.5k out of your pocket. You income has now gone down to 2.4k a month, before all other expenses.

First year is 7.7k in interest alone.

You need to be able to absorb a risk of no rent for a year and damages up to 40k at the extreme end(not joking here). Plus time for court cases and lawyers.

Its about 2022 or 6 years before you start paying more off the interest then the capital. By the end you will have paid 93k in interest and 253k in total for the 160k loan.

What you are really banking on here is that you never get screwed by a problem tenant. That there isn't really a value on your time during the 20 year period of having to be a landlord. That the value of the house does not drop significantly during this period or stays static relative to inflation.

I am early thirty's, I do have the money. I worked in property maintenance at one point. I really don't know why people would subject themselves to the above. I would much prefer focusing on getting a mortgage on a house I want and paying it off quick, so I have a ton of disposable income later in life. If you have no income or low income, lots of cash, lots of free time, your staying in the area where your rental house is, then I would say it works financially. Or you have multiple property's paying rent to your company.

As for that property, it could have easily gone the other way for whoever bought it. Another recession and a house empty for long periods of time is a serious recipe for loosing money.

draiochtanois

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The_Conductor

draiochtanois wrote: »

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This can be as high as 58% (including PRSI, USC etc)

draiochtanois

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The_Conductor

draiochtanois wrote: »

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Depends on the status of the owner. For a self-employed landlord you could be looking at:

11% USC (depending on gross- rather than net income level)
4% PRSI (subject to minimum of 500)
40% Income tax

Its 55% not 58%- my bad.......

draiochtanois

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riclad

the Tax rate re landlords is complex,
my friend is a landlord her tax on rental income is zero.
As her loan is about 11 years old , her 75 per cent credit on interest is way more than her income ,
At some point the amount of interest she pays will decline and then she,ll
have to start paying tax on rental income .
her loan is 150k approx on a two bed apartment .
She has services charges 1000 euro plus property tax .
her rental income is 550 per month ,
Property is located near athlone.
i fill out her tax return on the apartment every year ,
eg self assessment tax return .
She pays tax ,prsi as an employee working full time in an office 5 days a week.
she makes no profit at all,on the apartment she cant afford to pay a rental agent .

shes in negative equity ,apartment is worth 70k .
After 10-12 years the tax credit you get for 75 per cent loan interest may decline,
assuming loan interest rates does not increase .

draiochtanois

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The_Conductor

riclad wrote: »

the Tax rate re landlords is complex,
my friend is a landlord her tax on rental income is zero.
As her loan is about 11 years old , her 75 per cent credit on interest is way more than her income ,
At some point the amount of interest she pays will decline and then she,ll
have to start paying tax on rental income .
her loan is 150k approx on a two bed apartment .
She has services charges 1000 euro plus property tax .
her rental income is 550 per month ,
Property is located near athlone.
i fill out her tax return on the apartment every year ,
eg self assessment tax return .
She pays tax ,prsi as an employee working full time in an office 5 days a week.
she makes no profit at all,on the apartment she cant afford to pay a rental agent .

shes in negative equity ,apartment is worth 70k .
After 10-12 years the tax credit you get for 75 per cent loan interest may decline,
assuming loan interest rates does not increase .

Riclad- if your friend has other income of at least €16,016 from other sources, they should be paying 7 per cent USC on rental income. PRSI and other tax- is determined separately (e.g. after capital and other allowances- USC is different). Just because your friend isn't making a profit on letting their apartment- does not mean they don't owe any tax.

Hollister11

I do think swords is the best value for money in Dublin. You can get 4 beds for the low to mid 300K range.

I don't live In swords, but it seems like a nice place.

draiochtanois

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Johngoose

Looking forward to the next bust!;-) The higher up house prices and rents go the better,we need to hit boom levels and beyond!;-)

Idbatterim

hilarious that rising prices are seeing as a good thing, hanging ourselves in more debt , more interest to the banks for nothing! Hurray :rolleyes:

I do think swords is the best value for money in Dublin. You can get 4 beds for the low to mid 300K range.

I don't live In swords, but it seems like a nice place.

when they eventually get a rail link out there, it will be a lot better...

The_Conductor

draiochtanois wrote: »

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Have a look at the breakdown of the CSO stats though- the inward migration- is predominantly young EU citizens- who are also a significant cohort of the increase in employment.........

I.e. we have a jump in people entering the country seeking rental accommodation- and a commensurate increase in employment which represents these people.

Native born Irish are continuing to leave in significant numbers- however, the destinations of choice are changing.

All-in-all, I don't see how this affects house prices- especially as our banking sector has entered quite a unique phase- where they don't want to take your money from you and offer remarkably poor savings rate (to the extent that some companies are now being charged negative rates)- and at the same time- they don't want to lend you money.......... What the hell is a bank that doesn't want your money- and also doesn't want to lend you money? Its a frigging zombie- thats what......... And- the Irish banking industry isn't unique either- the UK lenders are even worse...........

Shortage of supply is limiting any possible falls in property prices- however, the worsening of the credit issue- means prospective purchasers are under more pressure than ever before- which is also reflected in a jump in cash sales back over the 50% mark again.........

I honestly don't know what the hell is happening with this country- and indeed- the greater open environment- we're in unheard of territory- and the future is looking more and more bleak by the day...........

yqtwqxqm

Hollister11 wrote: »

I do think swords is the best value for money in Dublin. You can get 4 beds for the low to mid 300K range.

I don't live In swords, but it seems like a nice place.

Ive identified swords as my next investment.
Best yields I can find for regular let are on 1 bed apartments in Swords.
But since im all Airbnb at the moment its the top town for that too.
And of course the rail link whenever it comes. It will bring tenants to from the city center. or it will bring Airbnb guests the short trip from the airport.
I think its the hottest place to buy right now. But at the moment i am biased as i am already in the process of buying there right now.

yqtwqxqm

The_Conductor wrote: »

Have a look at the breakdown of the CSO stats though- the inward migration- is predominantly young EU citizens- who are also a significant cohort of the increase in employment.........

I.e. we have a jump in people entering the country seeking rental accommodation- and a commensurate increase in employment which represents these people.

Native born Irish are continuing to leave in significant numbers- however, the destinations of choice are changing.

All-in-all, I don't see how this affects house prices- especially as our banking sector has entered quite a unique phase- where they don't want to take your money from you and offer remarkably poor savings rate (to the extent that some companies are now being charged negative rates)- and at the same time- they don't want to lend you money.......... What the hell is a bank that doesn't want your money- and also doesn't want to lend you money? Its a frigging zombie- thats what......... And- the Irish banking industry isn't unique either- the UK lenders are even worse...........

Shortage of supply is limiting any possible falls in property prices- however, the worsening of the credit issue- means prospective purchasers are under more pressure than ever before- which is also reflected in a jump in cash sales back over the 50% mark again.........

I honestly don't know what the hell is happening with this country- and indeed- the greater open environment- we're in unheard of territory- and the future is looking more and more bleak by the day...........

Several people on here have been saying house prices will fall for years. All sorts of reasons given. Just looking at the actual prices, they have not been falling.

The_Conductor

yqtwqxqm wrote: »

Several people on here have been saying house prices will fall for years. All sorts of reasons given. Just looking at the actual prices, they have not been falling.

We're now in a position where they are stagnating in Dublin and Galway- Cork isn't far behind- the rest of the regions- however, are booming.........

The white elephant in the corner- of course- is volumes- which are far lower than we have ever experienced.

El_Dangeroso

The_Conductor wrote: »

We're now in a position where they are stagnating in Dublin and Galway- Cork isn't far behind- the rest of the regions- however, are booming.........

The white elephant in the corner- of course- is volumes- which are far lower than we have ever experienced.

As a FTB in Galway, what is this stagnation you speak of? I went for a viewing for a VERY mediocre house in Renmore last week. About 15 couples viewing, house down the road went for 313..

Rew

The_Conductor wrote: »

We're now in a position where they are stagnating in Dublin and Galway- Cork isn't far behind- the rest of the regions- however, are booming.........

The white elephant in the corner- of course- is volumes- which are far lower than we have ever experienced.

Nothing Ive been watching in the 500+ has made its asking in the areas of SCD i'm interested in. All highly sought after areas.

riclad

My Friend pays investor rate on loan ,i think its 4.5 per cent.
I don,t know what usc she pays,
she gets a letter from tax office your tax on rental income is zero every year.
of course she gets tax credit for property tax,and loan interest and service charges .
I think stagnation means prices are not rising ,
looking at one house that has 15 viewing does not mean alot.
With few new house,s being built , theres a limited no of house,s for sale .

OfflerCrocGod

Yet again PIBA asks for the CB rules to be changed, at least they now acknowledge the lack of supply as a problem http://www.rte.ie/news/2016/0824/811547-housing-property-rent/

Idbatterim

Of course lack of supply is the problem, along with the cost of building. There would be a lot more supplied, if Dublin densities were increased... I don't see how increasing the amount that can be borrowed or cutting deposit requirement, will do anything other than give everyone more money to buy the same property, driving prices up. People will be then calling for relaxing the rules again. It's a self fulfilling prophecy!!!

Piba. Ireland's largest group of financial brokers. Well they sure aren't a vested interest ...

The_Conductor

riclad wrote: »

of course she gets tax credit for property tax

I know you didn't mean to use the term 'tax credit' however, it would be remiss of me not to point out- property tax is *not* an allowable expense- there were proposals to allow it for residential landlords- however, it was never enacted in law. Statements from Revenue indicate that they will in time chase it, with penalties, for those who used it as an expense when submitting tax returns. If your friend has been claiming it as an expense- they had better regularise their tax situation immediately, or face the consequences.

Similarly- USC is charged on the gross rental income- before determination of other taxes (such as income tax for example).

Just because you don't owe income tax (which can be entirely legitimate)- doesn't mean you don't owe other taxes........

SarahMollie

Rew wrote: »

Nothing Ive been watching in the 500+ has made its asking in the areas of SCD i'm interested in. All highly sought after areas.

This is interesting. I'll be looking in that range when it comes time to trade up. The deposit rules seem to have created a situation where theres tonnes of competition around the 250-400k mark but beyond that its hard to see whos affording it?

I'm fortunate in that I managed to buy by myself (with the aid of small inheritance) and my OH has very good savings. We both have good jobs so when the time comes to buy together, we should have a good budget. I don't think thats the norm though, so I'm wondering how all the many many fancy and expensive houses around SCD are going to be afforded.

Johngoose

Anybody else just tempted to bail out of the country for a few years?Would you rather live in a "cool" city abroad like New York and pay the same or less money than in a basic city like Cork/Dublin?

The_Conductor

SarahMollie wrote: »

I'm wondering how all the many many fancy and expensive houses around SCD are going to be afforded.

From talking to a few estate agents- there isn't anything like 500 units on the market in SCD- but funnily enough- a higher than normal proportion are cash sales (often by people trading up- who have saved the cash difference- like yourself). Aka- banks aren't lending for a lot of the purchases in the area (predominantly because they are not in agreement with property valuations)- so this leaves cash as king.........

Its funny that there seems to be so many strong cash buyers still out there- it really isn't what many of us would have expected..........

SarahMollie

Johngoose wrote: »

Anybody else just tempted to bail out of the country for a few years?Would you rather live in a "cool" city abroad like New York and pay the same or less money than in a basic city like Cork/Dublin?

I've a friend in New York and her rent is over $3.5k per month for an unspectacular apartment.

Its hardly the same money.

SarahMollie

The_Conductor wrote: »

From talking to a few estate agents- there isn't anything like 500 units on the market in SCD- but funnily enough- a higher than normal proportion are cash sales (often by people trading up- who have saved the cash difference- like yourself). Aka- banks aren't lending for a lot of the purchases in the area (predominantly because they are not in agreement with property valuations)- so this leaves cash as king.........

Its funny that there seems to be so many strong cash buyers still out there- it really isn't what many of us would have expected..........

Yeah its hard to know where its all coming from. I would have thought we'd be in a great position but apparently there are plenty like us. I do have a mortgage and will need one again to finance a new house but I suppose I was hoping that that would take us out of the most crowded segment of the market, where there wouldnt be so many bidders on a single property.

Makes you wonder who are the people who can afford the stuff thats priced in the millions!

greenorchard

We're in the process of buying in SCD & a good few houses I was keeping an eye on over the last few months are now on the PPR. Every one of them went for over asking, these are houses that were asking from 400-500k. One house we liked but was way out of our budget (535k asking price) sold for 575k. Most of the others went for around 30k-ish over asking & our own house, which we'll hopefully close on soon, we paid 17k over the asking price.