Do we have another property crash coming?

Lucena

Atlantic Dawn wrote: »

The lack of available properties is keeping prices up as there's enough land within the M50 to build over a million homes but there's not the access to cash for builders to build them.

There might physically be space to plonk down a million homes, but you would also need to put in tonnes of infrastructure such as roads, water pipes, waste water pipes, electricity etc.
You would then need to establish all the necessary facilities, (schools, hospitals etc.). Deal with extra road and public transport traffic etc.

Then of course there are areas one shouldn't build in such as flood plains, and of course urbanisation will increase surface water run-off and increase flood risks downstream.

Taking all that into consideration, there maybe isn't that much land available, unless you go high-density i.e. more high-rises.

koheim

listermint wrote: »

Cuddlesworth wrote: »

There is a substantial number of mid thirtys couples in Dublin with 6 figure combined incomes and deposits.

I dont think that is entirely true either. Those same couples are tied up with high rents etc. 'Substantial' would be over cooking it.

'Some' would be more accurate those some having gotten assistance from family etc.

You would be surprised...
So in order to get a mortgage you need a permanent full time job, and the average annual salary for a full time worker is 45K. If you are a average couple where both people are working household income is 90K. In Dublin this would be higher.

Graham

riclad wrote: »

i read an article yesterday people who own land are waiting till 2019 to sell it to avoid paying cgt tax.

I spotted that too, hold the land for 7 years (expiring 2019/2020) to avail of the CGT tax breaks.

It would be really interesting to know how much land is bottlenecked because of this.

seamus

alane20 wrote: »

How can you say there isn't tons of investors flooding the market when vulture funds are buying whole estates & apartment blocks, there will absolutely be another crash, property to irish people is like a drug, a get rich quick scheme, intrest rates can not stay at current levels, and when they rise the amount of defaults will be huge, and the vultures will pick the market clean,

Vulture funds for the most part aren't driving any demand. They're not consuming housing stock that would otherwise be available on the main market, and after a short blip the housing they do buy comes back into circulation again.
The previous boom was fuelled by internal and external investors pumping their cash into new housing stock, which is an inflation of demand. The conversion of owner-occupied housing into buy-to-let housing is also a contributor to this issue.

Neither of these things are happening on any large scale at present. Vulture funds could be said to be helping break the supply issue in the market by purchasing distressed (i.e. unsellable) housing stock and reselling it back into the market later on.

Michael D Not Higgins

koheim wrote: »

You would be surprised...
So in order to get a mortgage you need a permanent full time job, and the average annual salary for a full time worker is 45K. If you are a average couple where both people are working household income is 90K. In Dublin this would be higher.

That's far from average. The top 10% of earners in Ireland are on above €75,000.

Two thirds are on less than the average 35.6k, with the median around 32k (full time) and 28.5k (all, including part time). If we allow for two full time workers in Dublin (with a bit of premium for them working in Dublin), you're probably looking around 70k for a household.

Now that means half of the people are making more and half are making less. A big chunk of the half above that line are already home owners, like the previous generation. So the majority of FTBs looking to buy homes are in the lower category with max borrowings in the mid 200s and max house price below 300k.

It's the lower end of the market where the focus should be.

goz83

Graham wrote: »

Central bank rules.

They will change to suit the demands of the day.

Graham wrote: »

Some people would call that prudent lending and may even go as far as suggesting if this approach had been enforced 15 years ago the property bubble wouldn't have been anywhere near as devastating.

And some people would call it what it is....policy of sh1te and nonsense. In my specific case, there was less than zero additional risk, as they would have been getting a higher value asset, in the same locality on their books, funded by cash from the mortgage holder, while receiving the same monthly payments, with no addition, or loss with respect to the mortgage principal.

Graham wrote: »

Can't say I watched it. I'd be interested in the 'unsustainable loans' discussion as that's something I'd expect the current central bank rules to limit.

Well, you said it yourself. So, as above, these can change.

ThisRegard wrote: »

Answered below, plus the fact that banks were pretty strict before the central bank rules came in anyway, they don't want to loan and be at risk of not getting their cash back. Even if they are greedy and profiteers, such a place is not going to loan to anything other than a sure thing are they, especially with the bankruptcy changes.

Really? What Central Bank? The one in Ireland certainly wasn't "back then". I bought at the end of the boom. I was in my "permanent job" about 6 MONTHS earning a basic of 25K plus commission. My wife was a newly qualified teacher but was not permanent and had only a couple of years behind her. I had actually moved jobs before signing the loan agreement and we had 2 kids at the time. Even by the rules back then, we should not have been granted a mortgage of nearly 400k, but we were given one and have been paying it since then.

ThisRegard wrote: »

Banks currently stress test applicants based on such scenarios, I can't remember the percentage rise they stress you at, some are tougher than others.

The stress tests are a loada balls. It's the equivalent of the mandatory Safety Statement for public liability insurance. Yeah, you need the statement, but everyone knows that not even the insurance companies know what's in the detail of the document.

Graham

goz83 wrote: »

And some people would call it what it is....policy of sh1te and nonsense. In my specific case, there was less than zero additional risk, as they would have been getting a higher value asset, in the same locality on their books, funded by cash from the mortgage holder, while receiving the same monthly payments, with no addition, or loss with respect to the mortgage principal.



Well, you said it yourself. So, as above, these can change.



Really? What Central Bank? The one in Ireland certainly wasn't "back then". I bought at the end of the boom. I was in my "permanent job" about 6 MONTHS earning a basic of 25K plus commission. My wife was a newly qualified teacher but was not permanent and had only a couple of years behind her. I had actually moved jobs before signing the loan agreement and we had 2 kids at the time. Even by the rules back then, we should not have been granted a mortgage of nearly 400k, but we were given one and have been paying it since then.

I'm confused, you appear to be suggesting the amount your bank originally loaned you was imprudent/excessive while bemoaning the fact the rules have now been tightened to the point where you can't borrow any more.

As for the current central bank policy/rules, there's no immediate sign they're going to change despite political pressure for such changes.

goz83

goz83 wrote: »

.............

A couple of months ago, I made a general enquiry about moving to a larger home, which is/was 100k more expensive than my mortgage. I was offering to cover the difference in the property value in cash, but the new rules currently disallow people in my situation (people looking to upgrade and who have children) to move. According to the bank, we are way below the poverty line and should not be "surviving" on our income :pac:.............

So that takes you out of the trader upper market, this is an example of why there quite likely won't be another bubble, pre 2007 someone in your situation would have gotten the go ahead.

I'd also suspect the bank weren't 100% confident the €100k you were bringing to the table wasn't a loan of sorts from relatives etc.

ThisRegard

goz83 wrote: »

Really? What Central Bank? The one in Ireland certainly wasn't "back then". I bought at the end of the boom.

But we're not talking about back then though are we? We're talking about now, and I said the banks themselves have been pretty strict anyway without the need for the central bank rules.

goz83 wrote: »

The stress tests are a loada balls. It's the equivalent of the mandatory Safety Statement for public liability insurance. Yeah, you need the statement, but everyone knows that not even the insurance companies know what's in the detail of the document.

I don't really know what you're talking about here.

listermint

listermint wrote: »

I dont think that is entirely true either. Those same couples are tied up with high rents etc. 'Substantial' would be over cooking it.

'Some' would be more accurate those some having gotten assistance from family etc.

You can't state that those couples in their 30s on 6 figure joint salaries with deposits got assistance to be fair, the smell of begrudgery from your post is overwhelming.

seamus

Michael D Not Higgins wrote: »

Now that means half of the people are making more and half are making less. A big chunk of the half above that line are already home owners, like the previous generation. So the majority of FTBs looking to buy homes are in the lower category with max borrowings in the mid 200s and max house price below 300k.

I don't at all disagree with your calculations. But it's worth remembering that the cohort of potential home purchasers will always be skewed towards higher incomes. The lowest income section of the market is serviced by social housing and rent allowance recipients, who will virtually never convert into home owners.

So while I agree that FTBs probably aren't in the top 10% of earners, I would imagine on average they're skewed a bit above the average household income.

athtrasna

OP I find it unsettling that you are hoping for a crash in the knowledge of the devastation that previous crashes have brought on families.

Yes you are eager to get into the market and would like bargains but this thread isn't the first place you've expressed this desire.

The market can't keep going the way it is but I would be happy to never see a crash again. Plateau or dip but no more crashes, too many broken and lost lives.

Michael D Not Higgins

seamus wrote: »

I don't at all disagree with your calculations. But it's worth remembering that the cohort of potential home purchasers will always be skewed towards higher incomes. The lowest income section of the market is serviced by social housing and rent allowance recipients, who will virtually never convert into home owners.

So while I agree that FTBs probably aren't in the top 10% of earners, I would imagine on average they're skewed a bit above the average household income.

Good point but one which I think is equalled by the higher earners in the previous generation which offsets the lower earners in the current generation. I don't know the full breakdown but I'd say most FTBs are clustered close to the median so that's where the analysis and policy should target.

koheim

Michael D Not Higgins wrote: »

koheim wrote: »

You would be surprised...
So in order to get a mortgage you need a permanent full time job, and the average annual salary for a full time worker is 45K. If you are a average couple where both people are working household income is 90K. In Dublin this would be higher.

That's far from average. The top 10% of earners in Ireland are on above 75,000.

Two thirds are on less than the average 35.6k, with the median around 32k (full time) and 28.5k (all, including part time). If we allow for two full time workers in Dublin (with a bit of premium for them working in Dublin), you're probably looking around 70k for a household.

Now that means half of the people are making more and half are making less. A big chunk of the half above that line are already home owners, like the previous generation. So the majority of FTBs looking to buy homes are in the lower category with max borrowings in the mid 200s and max house price below 300k.

It's the lower end of the market where the focus should be.

Here is the link to CSO confirming that [font=Roboto, sans-serif]Average annual earnings for full-time employees in 2015 were 45,075[/font]
http://www.cso.ie/en/releasesandpublications/er/elca/earningsandlabourcostsannualdata2015/

Michael D Not Higgins

koheim wrote: »

Here is the link to CSO confirming that [font=Roboto, sans-serif]Average annual earnings for full-time employees in 2015 were 45,075[/font]
http://www.cso.ie/en/releasesandpublications/er/elca/earningsandlabourcostsannualdata2015/

That's average not median, which is skewed by higher earners. Not to mention that just doubling an average of all workers to get an average for a household is a bit dodgy for statistics too. I did it for my median as a worst case.

Cuddlesworth

listermint wrote: »

I dont think that is entirely true either. Those same couples are tied up with high rents etc. 'Substantial' would be over cooking it.

'Some' would be more accurate those some having gotten assistance from family etc.

Michael D Not Higgins wrote: »

That's average not median, which is skewed by higher earners. Not to mention that just doubling an average of all workers to get an average for a household is a bit dodgy for statistics too. I did it for my median as a worst case.

Versus how many houses being built/sold? I'm not saying there are huge numbers of 100k+ couples in Dublin. But I am saying there are enough couples in Dublin earning that money to continue driving the prices for the foreseeable future, its not drying up anytime soon.

koheim

The average is the average and that was the number I provided above. My point is that when discussing mortgages it is no point using average OR median salary of ALL people in Ireland. Use ONLY average or median salary of FULL TIME employees, as only these will be able to get a mortgage (with exceptions).

seamus

athtrasna wrote: »

OP I find it unsettling that you are hoping for a crash in the knowledge of the devastation that previous crashes have brought on families.

Well, he may not be aware. If I had been early 20's in 2011/2012 and managed to land a good tech job and put away a significant chunk of savings in the last five years, then another property crash would mean on paper that I could buy a huge house in a nice area with a tiny mortgage.

In reality what I'd be likely unaware of is the fact that in the event of another property crash I'd have trouble getting any kind of mortgage, I'd likely see a drop in salary, or end up being made redundant, and the number of desirable properties on sale would be absolutely tiny because people don't want to or can't afford to sell at low prices.

A property crash doesn't mean houses just become cheap and it becomes party time for those who don't own property. A few people made out like bandits around 2011/2012 when the market began to recover, and they had a good chunk of cash and a steady job. But the vast majority were locked out of the market by the same crash that ruined those who were in it.

Right2Write

Graham wrote: »

I think you'll find the current tax rules, RTB, eviction process are already doing that job. +1 on encouraging large-scale, long-term commercial landlords.

Maybe but there's a 'cute hoor' type of buy to let landlord as well, who views their tenants as cash cows to pay off the mortgage, gain an asset at minimal cost and if it can be done on the QT, no need to declare taxable income etc. These people are a cancer.

Tessa Tangy Plumbing wrote: »

Anywhere that property businesses are taking over people are complaining about it like crazy, both people living there and certain populist politicians in the AAA etc. A business that takes over a complex and ups the rent to market rate as is their right and their job as a business to maximise profits is branded like some Nazi sympathiser in the media etc.

I don't agree. Businesses and large investors who business lies in the rental market are not by and large into ripping people off. It's not in their long term interests. They are much more likely to provide continuity of supply and relatively stable rents.

athtrasna wrote: »

OP I find it unsettling that you are hoping for a crash in the knowledge of the devastation that previous crashes have brought on families.

Yes you are eager to get into the market and would like bargains but this thread isn't the first place you've expressed this desire.

The market can't keep going the way it is but I would be happy to never see a crash again. Plateau or dip but no more crashes, too many broken and lost lives.

Me too, OP comes across someone hoping for a quick killing at the expense of others. If we can succeed as a society at all, we must pull the rug from under these types.

Michael D Not Higgins

Cuddlesworth wrote: »

Versus how many houses being built/sold? I'm not saying there are huge numbers of 100k+ couples in Dublin. But I am saying there are enough couples in Dublin earning that money to continue driving the prices for the foreseeable future, its not drying up anytime soon.

This I don't know. It's likely you're correct and current building rates are much lower than high earners in the FTB age group.

goz83

Graham wrote: »

I'm confused, you appear to be suggesting the amount your bank originally loaned you was imprudent/excessive while bemoaning the fact the rules have now been tightened to the point where you can't borrow any more.

By their own rules it was imprudent and excessive. I was making the point that it's been done before the world over and I believe it will be done again. When the rules get loose, so too will the people selling loans.

With regards to my "bemoaning", I wasn't looking to borrow any more money. You can't have read my post properly, because I said that the mortgage principal would not have changed and that I would have been adding the funds to upgrade and I would have only wanted the same mortgage moved to a new (higher value) asset.

Graham wrote: »

As for the current central bank policy/rules, there's no immediate sign they're going to change despite political pressure for such changes.

Nothing immediate, but the government are already bringing in policies to side step the rules somewhat. And look at the 2-3% cash back stuff. Shivering reminders of steps previously seen, which landed so many in situations that people are still feeling today.

Augeo wrote: »

So that takes you out of the trader upper market, this is an example of why there quite likely won't be another bubble, pre 2007 someone in your situation would have gotten the go ahead.

I'd also suspect the bank weren't 100% confident the €100k you were bringing to the table wasn't a loan of sorts from relatives etc.

Oddly enough, when I spoke to a mortgage advisor on the phone, he suggested that a relative could "give" some money toward the NE aspect of the mortgage to help approve any application I might make.

ThisRegard wrote: »

But we're not talking about back then though are we? We're talking about now, and I said the banks themselves have been pretty strict anyway without the need for the central bank rules.

Certainly looked like you were talking about back then.

ThisRegard wrote: »

Answered below, plus the fact that banks were pretty strict before the central bank rules came in anyway, they don't want to loan and be at risk of not getting their cash back. Even if they are greedy and profiteers, such a place is not going to loan to anything other than a sure thing are they, especially with the bankruptcy changes.

Idbatterim

Did Colm McCarthy not say on Claire Whatshername show last night that with the budget measures taken into account that we are back to borrowers being able to get unsustainable loans again?
He seemed quite animated about it.

*Caveat, I did get to hear the whole exchange with Simon Coveney.

he calls out a lot of the crap constantly repeated by the ignorant. A damn pity I wasnt on that show, cant be bothered with most of the pathetic topics on it, but this one is very serious...

several issue McCarthy mentioned, first of all, the still relatively high cost of a first time buyer home even on the outskirts of dublin. That the central bank rules are a good thing. Next point and I have been raising this issue for years, the JOKE that is the objection to housing from politicians , td's and ministers even from current government ministers and absolute nimbyism...

Idbatterim

While the same conditions don't exist this time around, there is already hugely inflated prices. Yes' getting a mortgage is harder now, but memory is short and the same mistakes will be made. When people can't afford homes, government is pressured, banks start handing out money like it's on fire and we get another boom bust. I call 2018 for a crash

if the central bank holds firm, the banks cant lend out, what the central bank wont permit!

The lack of available properties is keeping prices up as there's enough land within the M50 to build over a million homes but there's not the access to cash for builders to build them.

what? at manhattan densities? There isnt even anywhere near a million homes in the m50 currently!

A property crash doesn't mean houses just become cheap and it becomes party time for those who don't own property. A few people made out like bandits around 2011/2012 when the market began to recover, and they had a good chunk of cash and a steady job. But the vast majority were locked out of the market by the same crash that ruined those who were in it.

this is it, its all well and good saying " Ill wait for the crash" if it does come, you better make sure you are in a position to buy, or it will hardly be much use!

Jake Stiles

Atlantic Dawn wrote: »

The lack of available properties is keeping prices up as there's enough land within the M50 to build over a million homes but there's not the access to cash for builders to build them.

Imagine the state of the M50 if these are built.

riclad

IF you drive around dublin theres large empty sites in many areas
without going near the m50 .We might be at risk of recession if exports to the uk fall due to the fall in sterling .

4ensic15

Sleeper12 wrote: »

They have to go up higher in price if you expect to see a fall. They won't be falling from the level that they are now.
Historically we don't usually get bubbles. Usually house prices slow down & pick up again. Just because we had one property crash in the history of the state doesn't mean it's the norm.
Outside forces like britex are an unknown

There has been far more than one property crash. The last one was the most severe but there have been others. Mid 1980s saw house prices way down.

Hollister11

athtrasna wrote: »

OP I find it unsettling that you are hoping for a crash in the knowledge of the devastation that previous crashes have brought on families.

Yes you are eager to get into the market and would like bargains but this thread isn't the first place you've expressed this desire.

The market can't keep going the way it is but I would be happy to never see a crash again. Plateau or dip but no more crashes, too many broken and lost lives.

I'm not hoping for a crash. But the property market happens in cycles. When it crashes again I'm going to take full advantage of it. I'm not going to feel guilty about it. I'm going to grab any opportunities that become apparent. This thread is asking people's opinion on when it will happen again, which is will. Be it in 5, 10 or 20 years time.

I haven't 'expressed this desire' on other threads actually.

listermint

Augeo wrote: »

You can't state that those couples in their 30s on 6 figure joint salaries with deposits got assistance to be fair, the smell of begrudgery from your post is overwhelming.

Begrudgery?

Stupidest term on this island.

Where did I say they were wrong to get help?

Explain.... Oh wait you can't you were just waiting from your grib.


I live in reality where friends and family paying 1300 to 1800 rents are getting assistance for deposits not really sure what reality you live in.

Oh wait the one were Begrudgery is a respected term and not one used by folks who can't articulate a valid response.



Enjoy

Graham

Hollister11 wrote: »

When it crashes again I'm going to take full advantage of it.

Good plan, get saving. As others have pointed out such crashes are usually accompanied by a severe shortage of financing.

Ideally you'll want the price of a house in the bank.

Silverbling

I am one of the "displaced" that can not afford the rents, my friend lives in Paris

Housing Minister Emmanuelle Cosse announced on Wednesday that rent regulations are to be rolled out in 412 local authorities in the Greater Paris region of Ile-de-France.

These will affect around 8 million people, mostly in the areas just outside of central Paris in the départments of Hauts-de-Seine, Seine-Saint-Denis, Val-de-Marne, Yvelines, Val d'Oise, Essonne and Seine-et-Marne.

The reform meant Paris rent prices are now measured in euros per square metre and based on the building's age and location.

Under the rules no new rental contract could charge more than 20 percent per square meter above the neighborhood’s median rent, which is assessed annually by a "local rent observatory".

So for example if you live in a 30 square metre one-bedroom apartment around Pére Lachaise in Paris, the maximum rent should in theory be €729 per month

https://www.thelocal.fr/20160407/are-you-paying-too-much-rent-in-france
https://www.thelocal.fr/20160630/new-rental-caps-to-hit-flats-outside-central-paris

This made me laugh

It said that it was "disturbing" to see that so many households are struggling to purchase homes after spending so much on rent, adding that some renters are overpaying by more than €100 a month.

Meanwhile, the rental caps have irked real estate agents and landlords' associations, which have promised to wage legal battles with legal officials choosing to roll out the changes.

That's despite landlords benefiting from certain measures in the reform like a state-run insurance scheme that covers them if tenants don't pay their rent.