Proposal for a Generous New Grant for First Time Buyers

Villa05

keane2097 wrote:

Nice to hear an alternative opinion at least, whether or not the logic bears out.

An exercise on this sunny day?
Re read MarkAnthonys post and then look up the definition of pyramid scheme. Try and find the differences if any?

Idbatterim

Pathetically predictable. Anything for the shortview towards getting a few votes in the impending election from amadáin who are incapable of seeing that when the state gives them money back to buy a house that means they, and every other house purchaser, have more money to buy a house. And what happens house prices? Well, when more money is chasing the same number of houses, house prices rise. At the end of the day this stunt is just the state handing money over to private house sellers. Infuriating. Major déjà vu with stamp duty removal and other similar pre-election stunts. The Central Bank is the sole organisation which has acted responsibly (to howls of outrage from the muppets who cannot get the above maths) via its deposit etc restrictions. Now, the problem is the lack of supply.

The real solution is the elephant in the room.

the central bank should simply tighten the reigns again then. Simply whatever the government grant is, reduce the first time borrowers ability to borrow, by the same amount. Actually force them to deal with the actual problems...

SUPPLY! Look I get that in some cases it isn't viable to build, possibly even in Dublin, but where it is viable to build and where a huge amount of people want to live, I.e the docklands, why are the heights capped at not far from georgian building floor counts?!

I'm not a tinfoil hatter, but you would nearly swear its a conspiracy, the cannot possible be that fu**ing stupid!!! :mad:

dearg lady

Cuddlesworth wrote: »

I know personally of a few people with debts of 1 million plus written off. Makes sense, they had zero means of paying it back off.

I know not one single person who had a penny written off, so forgive me for my skepticism!

MarkAnthony

Villa05 wrote: »

An exercise on this sunny day?
Re read MarkAnthonys post and then look up the definition of pyramid scheme. Try and find the differences if any?

It's a better pyramid scheme than the current one feeding exclusively into government coffers and meaning that some people would never be able to get out of renting.

The details need to be made available, but in general these schemes have worked in other countries.

Yes it would be nice if the market just ran on it's own but the CB bank rules are sensible and sound, this scheme attempts to counter the harness some people experience. I'm not sure why no equity is being taken, but I'd rather see renters get back some of the double tax they're paying.

Hasmunch

So the government launched Rebuilding Ireland today but

RTE

First-time buyers will have to wait until the Budget in October to hear the exact details of what Government is proposing to help them buy a home.

I will be interested to what exactly will be rolled out in October but Rebuilding Ireland looks to be a step in the right direction.

matrim

First-time buyers will have to wait until the Budget in October to hear the exact details of what Government is proposing to help them buy a home.

This just introduces more uncertainty into the market. They said they would back-date it but without details of what the plan entails it will put people off. For example, is it new builds only? Or people with think if they wait until October they will have an extra 5k for their deposit etc

Bob24

matrim wrote: »

This just introduces more uncertainty into the market. They said they would back-date it but without details of what the plan entails it will put people off. For example, is it new builds only? Or people with think if they wait until October they will have an extra 5k for their deposit etc

Agreed - announcing that you will announce an undefined policy in 3 months time and backdate it is very strange.

Hazydays123

MarkAnthony wrote: »

It's a better pyramid scheme than the current one feeding exclusively into government coffers and meaning that some people would never be able to get out of renting.

The details need to be made available, but in general these schemes have worked in other countries.

Yes it would be nice if the market just ran on it's own but the CB bank rules are sensible and sound, this scheme attempts to counter the harness some people experience. I'm not sure why no equity is being taken, but I'd rather see renters get back some of the double tax they're paying.

What it all boils down to is the fact that all FTBs will receive this 'grant', so the market will be artificially inflated with all this free money. Prices will go up. The FTB will end up in the same property that they could have afforded without the grant, but they'll now have a mortgage that's 15-30k bigger. Who wins in that scenario? The bank and the vendor.

FTBs also have to satisfy other conditions such as the 3.5x income rule and affordability of repayments. I'd say you'd find a lot more people are denied mortgages because of these 2 factors as opposed to a lack of deposit.

MarkAnthony

Hazydays123 wrote: »

What it all boils down to is the fact that all FTBs will receive this 'grant', so the market will be artificially inflated with all this free money. Prices will go up. The FTB will end up in the same property that they could have afforded without the grant, but they'll now have a mortgage that's 15-30k bigger. Who wins in that scenario? The bank and the vendor.

FTBs also have to satisfy other conditions such as the 3.5x income rule and affordability of repayments. I'd say you'd find a lot more people are denied mortgages because of these 2 factors as opposed to a lack of deposit.

Your analysis doesn't take into account the people that can't get a deposit together. Prices need to go up anyway to encourage builders and start freeing up property that's still in neg equity.

It absolutely is a pyramid scheme, it absolutely helps vested interests, it's far from perfect but it's a step in the right direction.

Heisenberg.

This post has been deleted.

Spanish Eyes

Would have been easier and less bureaucratic to scrap the hefty deposit requirement for FTB for 12 months say, and the deposit returned in the "Backtracked" Finance Bill in October to those who had to have 20%. or whatever the % is.

Whoa, how many would get mortgages then! But I think the Central Bank still has the reins on the deposit thing.

No matter what way you look at it, it is just going to result in house prices going up and up and up.

Which is what they want under the guise of helping FTBs after all.

MarkAnthony

The deposit requirement needs to remain it's a safety net for the banks. A grant which is given from public funds, and that can be withdrawn as needed is a different animal entirely.

Spanish Eyes

Heisenberg. wrote: »

This post has been deleted.

Apparently the legislation will be backdated to today.

First time I have EVER heard of retrospective legislation for anything, but I suppose the housing MORKET is different.

As you say though, who knows who will be in power come the Budget anyway? And also who knows the details either yet?

Balmed Out

Spanish Eyes wrote:

Apparently the legislation will be backdated to today.

Are you sure, I got sale closed at 10 am....

Spanish Eyes

Balmed Out wrote: »

Are you sure, I got sale closed at 10 am....

Report on RTE.ie.

First-time buyers will have to wait until the Budget in October to hear the exact details of what Government is proposing to help them buy a home.

However, Minister for Housing Simon Coveney has said that any changes in Budget 2017 for first-time buyers will be back-dated to today.

http://www.rte.ie/news/2016/0719/803293-housing/

Oh, and congratulations on the closing today lots of luck.

Balmed Out

Spanish Eyes wrote:

Oh, and congratulations on the closing today lots of luck.

Cheers

Wow if I quality for this (though completely against the proposals) lots of luck is right! Money lodged on Friday morning to vendors account but only appeared electronically today so just closed this morning.
Im off to buy a lotto ticket in case it really is my lucky day :-)

Hazydays123

Heisenberg. wrote: »

This post has been deleted.

If it's backdated then the best move would be to sign contracts now. You avoid the overheated market which will result from this grant and you'll get a nice little lump sum from the Government.

Hazydays123

MarkAnthony wrote: »

Your analysis doesn't take into account the people that can't get a deposit together. Prices need to go up anyway to encourage builders and start freeing up property that's still in neg equity.

It absolutely is a pyramid scheme, it absolutely helps vested interests, it's far from perfect but it's a step in the right direction.

If you need a 30k deposit then a 3k grant will make very little odds to you.

If you have the means to even get close to 30k savings then you would have that 3k saved in a few months extra anyway without this Government intervention.

You don't seem to understand the basic economic principles of supply and demand. This measure will push up prices. Your analysis is that prices need to go up in order to encourage building? Why doesn't the Government directly incentivise building schemes rather than making you and I take the hit through an inflated purchase price and a crippling mortgage?

Say you have 19k saved and all you need is another 3k to have the deposit for your dream 220k property.
The government gives you a 3k grant, so now you have your deposit-happy days!
But everybody else in the market also gets this 3k grant. They can also afford your dream property. People who had a larger amount than you in the first place also get this grant. A bidding war commences. The property goes for more than it ever would have achieved without this artificial injection of cash. If you couldn't have afforded the property in the first place, you've probably lost it anyway.

How are you doing better in this situation?

Hazydays123

MarkAnthony wrote: »

Prices need to go up anyway to encourage builders and start freeing up property that's still in neg equity.

Also, there's a reason that those properties are in negative equity. They were bought at crazy celtic tiger prices, are probably of a substandard build, in poorly serviced locations and are too small for being anything beyond a starter home.

Why on earth should a FTB of today (with the benefit of hindsight) pay anything near the price that will get you out of negative equity?
Then they'd be making the same mistake you made in buying such an overvalued property.

Bob24

Hazydays123 wrote: »

If you need a 30k deposit then a 3k grant will make very little odds to you.

If you have the means to even get close to 30k savings then you would have that 3k saved in a few months extra anyway without this Government intervention.

You don't seem to understand the basic economic principles of supply and demand. This measure will push up prices. Your analysis is that prices need to go up in order to encourage building? Why doesn't the Government directly incentivise building schemes rather than making you and I take the hit through an inflated purchase price and a crippling mortgage?

Say you have 19k saved and all you need is another 3k to have the deposit for your dream 220k property.
The government gives you a 3k grant, so now you have your deposit-happy days!
But everybody else in the market also gets this 3k grant. They can also afford your dream property. People who had a larger amount than you in the first place also get this grant. A bidding war commences. The property goes for more than it ever would have achieved without this artificial injection of cash. If you couldn't have afforded the property in the first place, you've probably lost it anyway.

How are you doing better in this situation?

On top of that, the argument that prices need to go up for building to start is only looking at one side of the problem. There are many other developed European countries where it is possible to make profit when selling for much cheaper than current Dublin prices. So clearly there is an other route which is to look at why Irish builders can't or don't want to build at current prices and what is the cost different with other countries.

MarkAnthony

Hazydays123 wrote: »

Also, there's a reason that those properties are in negative equity. They were bought at crazy celtic tiger prices, are probably of a substandard build, in poorly serviced locations and are too small for being anything beyond a starter home.

Why on earth should a FTB of today (with the benefit of hindsight) pay anything near the price that will get you out of negative equity?
Then they'd be making the same mistake you made in buying such an overvalued property.

Reasons stated above. It's also not a binary as is so often put forward in these threads.

Eric Cartman

I think anyone who buys a property last sold in 2005/2006/2007 and doesn't leave the seller in a fair chunk of negative equity is being a fool. Those properties were not worth the money then, and certainly aren't now considering what we are seeing.

MarkAnthony

Bob24 wrote: »

On top of that, the argument that prices need to go up for building to start is only looking at one side of the problem. There are many other developed European countries where it is possible to make profit when selling for much cheaper than current Dublin prices. So clearly there is an other route which is to look at why Irish builders can't or don't want to build at current prices and what is the cost different with other countries.

Indeed, so as I've pointed out it's not a perfect solution and it's certainly not a whole solution but a corollary of it being only one facet of the problem is it's one facet of the problem being dealt with.

We need to get it out of our heads, both on this forum and in general, that there are simple problems to the housing situation in Ireland.

Hazydays123

MarkAnthony wrote: »

Reasons stated above. It's also not a binary as is so often put forward in these threads.

Yes, I get that it's not as binary as this thread would suggest. And I read your OP.

But if this measure is designed solely for FTBs buying new build properties (as has been hinted at) then how will it help you and your negative equity apartment?
It will probably put you in worse negative equity because the FTB is being incentivised to buy a new build.

MarkAnthony

Hazydays123 wrote: »

Yes, I get that it's not as binary as this thread would suggest. And I read your OP.

But if this measure is designed solely for FTBs buying new build properties (as has been hinted at) then how will it help you and your negative equity apartment?
It will probably put you in worse negative equity because the FTB is being incentivised to buy a new build.

While the details certainly aren't confirmed let's assume it's only for new builds - which would be a huge mistake IMHO. If there is a general uptick in prices it's more than likely going to cause an overall increase in second hand homes as well. If it doesn't then there has been a double win. FTBs have managed to get houses and not had to subsidise me. If it does cause a reduction in the prices of second hand homes that's a triple win as trader-up/downs have cheaper house prices.

Overall although my OP was rather self centred, I'm not too bothered. I'm actually not in neg equity and I'll hang on to the apartment as long as I need to which is actually part of the problem. If the apartment came up about another 10-15% I'd probably part with it meaning one less unit being held by a LL and another being owner occupied. That said perhaps the strategy doesn't want that as we've less rental units.

Putting all of that aside - getting those people into the property market that (a) want to be in it (b) can afford to be in it and (c) done so in a sustainable manner - is not a bad thing. It's not as simple at the moment as saying 'you can't afford a deposit - you can't afford to buy', neither should we be relaxing the CB rules. What caused the last issue wasn't deposits is was huge leverage on earnings. Yes, we absolutely need to ensure we don't, by degrees, end up back there but even a €20K grant won't take us within a fraction of people on 30K household incomes being offered the guts of a million euro in loans.

Eric Cartman

MarkAnthony wrote: »

While the details certainly aren't confirmed let's assume it's only for new builds - which would be a huge mistake IMHO. If there is a general uptick in prices it's more than likely going to cause an overall increase in second hand homes as well. If it doesn't then there has been a double win. FTBs have managed to get houses and not had to subsidise me. If it does cause a reduction in the prices of second hand homes that's a triple win as trader-up/downs have cheaper house prices.

Overall although my OP was rather self centred, I'm not too bothered. I'm actually not in neg equity and I'll hang on to the apartment as long as I need to which is actually part of the problem. If the apartment came up about another 10-15% I'd probably part with it meaning one less unit being held by a LL and another being owner occupied. That said perhaps the strategy doesn't want that as we've less rental units.

Putting all of that aside - getting those people into the property market that (a) want to be in it (b) can afford to be in it and (c) done so in a sustainable manner - is not a bad thing. It's not as simple at the moment as saying 'you can't afford a deposit - you can't afford to buy', neither should we be relaxing the CB rules. What caused the last issue wasn't deposits is was huge leverage on earnings. Yes, we absolutely need to ensure we don't, by degrees, end up back there but even a €20K grant won't take us within a fraction of people on 30K household incomes being offered the guts of a million euro in loans.

and when the buyer wants rid of it they'll be thinking the same thing . So you'll just stagnate the supply again. Somebody has to lose money on these properties to get the market going again. Personally I think the silly 2005-7 buyers should be the ones losing 50k and accepting it.

MarkAnthony

Eric Cartman wrote: »

and when the buyer wants rid of it they'll be thinking the same thing . So you'll just stagnate the supply again. Somebody has to lose money on these properties to get the market going again. Personally I think the silly 2005-7 buyers should be the ones losing 50k and accepting it.

Of course you do, and of course we don't. Stalemate.

On your fist point though, you keep the market moving, sustainably, and inflation sorts it out in the long term.

Hazydays123

MarkAnthony wrote: »

While the details certainly aren't confirmed let's assume it's only for new builds - which would be a huge mistake IMHO. If there is a general uptick in prices it's more than likely going to cause an overall increase in second hand homes as well. If it doesn't then there has been a double win. FTBs have managed to get houses and not had to subsidise me. If it does cause a reduction in the prices of second hand homes that's a triple win as trader-up/downs have cheaper house prices.

An 'overall uptick in prices' won't occur in relation to those negative-equity second hand 'starter homes' for the exact reason that the FTB s are being incentivised to only buy new builds!! Those properties will be wallowing in negative equity even more than before.

I get that it will make trade-downs cheaper, but how does one trade up to a two-bed apartment exactly? It's still only a starter home.

Eric Cartman

MarkAnthony wrote: »

Of course you do, and of course we don't. Stalemate.

On your fist point though, you keep the market moving, sustainably, and inflation sorts it out in the long term.

tracked for inflation throughout the rest of time, anyone who pays a 2005-2007 price for any house on this island should have themselves examined by a mental health professional.

MarkAnthony

Eric Cartman wrote: »

tracked for inflation throughout the rest of time, anyone who pays a 2005-2007 price for any house on this island should have themselves examined by a mental health professional.

Ah uh. I see you're here for the constructive and well thought out posts so I'll leave it there with you.