Property Market 2017

theboringfox

http://www.irishexaminer.com/ireland/first-time-buyers-need-50k-deposit-456518.html

I think this is an interesting survey in context of above. If you compare Cork City and Dublin City then a couple in Cork is paying on average 19% of net income on a mortgage and in Dublin its 27% (forecast to be 29.2% by year end)

I think this points to areas such as Dublin being likely to cap out on house price growth as it starts to get unaffordable. It also points to the relative value in areas such as Cork City and the potential for a higher quality of life outside of Dublin.

I'll make one big caveat. The absolute amount of wages in Dublin may be higher to extent that say the amount left over in wages in absolute terms is higher and maybe then Dublin is still better value.

Having lived in Dublin for over 10 years and then moving back to Cork City I can say I think Cork is way better value right now for property and living. But I loved living in Dublin and if you've the means it's one of the best cities in the world to live.

The_Conductor

theboringfox wrote: »

I think this points to areas such as Dublin being likely to cap out on house price growth as it starts to get unaffordable. It also points to the relative value in areas such as Cork City and the potential for a higher quality of life outside of Dublin.

The percentage price growth in Dublin- is now almost half as high as it is for the rest of the country- i.e. the 12% price growth we now have penciled in for 2017- looks to be driven predominantly with house price rises in areas other than in Dublin. Curiously- absolute volumes- are showing a remarkable resurgence in the regions- versus Dublin- which is actually declining again.

Affordability factors- have kicked in- in Dublin already- and will over the next 18-24 months become more of a factor nationally- however, until the game of catch-up has run its course, we can still look forward to 10-14% price rises this year and next.

If you look at this forum alone- you'll see people paying 340-360 for a 3-4 bed semi detached in Maynooth- across the road from a halting site. This is nutty- and I'd argue wholly unsustainable- however, for now, its the state of play.

I'm not suggesting we are going to have a price crash- however, supply side issues are gradually relaxing- we look set to be within an asses roar of 18k units this year- and preliminary planning suggests this may increase (perhaps) to 19-20k next year. I.e. we're still below equilibrium levels (said to be 25k units)- but we're getting closer and closer to it.

At the moment- people are displaying irrational exuberance towards property- however, historically- irrational exuberance has been the Irish norm. I don't think we're going to see a rational stratification of price points for different property types- because the political will to drive a rational housing policy- quite simply isn't there.

The new Minister- is making some funny noises already- it looks like someone managed to get to him recently- and it now looks likely that there will be some sort of market supports created to assist small scale landlords- which is a remarkable turn-around (helped in no small part by the REITs now being held up as the bogeymen- thanks to their ability to affect the rent on thousands of units at the stroke of a pen).

Time will tell.

myshirt

Maybe this is for a new thread... but how do we compare to other locations? Like Germany? The UK?

Perhaps slightly off the wall, but caught a programme on one of those home channels of a couple buying a house in Palm Coast Florida. Great location in terms of access to main arterial routes, schools, and their jobs. 20 minute commute. Two average Joe Soaps, one was a paramedic, the other an advertising associate. Combined income of 110,000 USD, aged 26 and 25. Deposit of 6k in hand.

They bought a 2,500sq foot house with fenced in back yard, at least a 1/3 acre, move in condition, garage, fitted kitchen, solid wood flooring, well serviced community, lots of green space, a park, shopping centre down the road, passed inspection, few niggling bits but seller sorted it, for.... wait for it.... $160k.

The realtor *cough cough* described the market as having steady supply but not entirely a buyer's market, said the couple would have to be decisive. All the houses they looked at were less than 200k and were 2,000sq foot plus. Not block built or anything, but ok.

Yes, Palm Coast isn't Miami, but where in the world would you get a house for less than twice the average salary of two Joe Soaps? My wife seen a few more of these programmes for different parts of the US and none of them were over 2.5 times an average salary, bar one on Coronado Island.

Got me thinking - how many places are there across Europe that we can land two Irish workers and what would they get for their money? Are workers here getting value for their effort or are they better off to apply that skillset elsewhere?

Ardennes1944

Here we are both earning just over 100k which would be slightly above average but a nice house in the country of a decent siyze but commutable to a city will be 1-2 million..so not here!

Although interest rates are pretty low
My colleague got a 10 year fixed interest mortgage for 1.1% a couple months ago.

The_Conductor

Ardennes1944 wrote: »

Here we are both earning just over 100k which would be slightly above average but a nice house in the country of a decent siyze but commutable to a city will be 1-2 million..so not here!

Although interest rates are pretty low
My colleague got a 10 year fixed interest mortgage for 1.1% a couple months ago.

In an Irish context- I'm not sure that we do 10 year fixed packages- however, you're looking at 4%+ for a 4-5 year term (its the highest in Europe). I wasn't aware you could get a 1.1% on 10 year fixed in Switzerland- it sort of is a bit no brainer to buy at these sort of rates- when you factor inflation into the equation, they are paying you to borrow money.......... If you allowed a salary multiple of 3- you might get a small apartment in a reasonably central location- however, nothing you'd write home about- so I suppose the Swiss situation isn't a million miles from the Irish situation- just on a different scale.

LiamoSail

theboringfox wrote: »

http://www.irishexaminer.com/ireland/first-time-buyers-need-50k-deposit-456518.html

I think this is an interesting survey in context of above. If you compare Cork City and Dublin City then a couple in Cork is paying on average 19% of net income on a mortgage and in Dublin its 27% (forecast to be 29.2% by year end)

I think this points to areas such as Dublin being likely to cap out on house price growth as it starts to get unaffordable. It also points to the relative value in areas such as Cork City and the potential for a higher quality of life outside of Dublin.

I'll make one big caveat. The absolute amount of wages in Dublin may be higher to extent that say the amount left over in wages in absolute terms is higher and maybe then Dublin is still better value.

Having lived in Dublin for over 10 years and then moving back to Cork City I can say I think Cork is way better value right now for property and living. But I loved living in Dublin and if you've the means it's one of the best cities in the world to live.

The Examiner's opinions and thoughts on Cork are about as objective as North Korean State TV's are on North Korea

cnocbui

The_Conductor wrote: »

I've worked in agriculture sectors in Denmark, Holland, Germany and Portugal- in various capacities down the years. It was most pronounced in Portugal- but obvious in the others. I found it to be quite surprising.

That's interesting. Doesn't seem to be the case in Canada, The US, UK, Australia, NZ, France, Switzerland, or Ireland.

Bob24

The_Conductor wrote: »

I wasn't aware you could get a 1.1% on 10 year fixed in Switzerland- it sort of is a bit no brainer to buy at these sort of rates- when you factor inflation into the equation, they are paying you to borrow money..........

Yes we are really getting screwed here. To remain within the EU/eurozone, in France you could get 1.05% fixed over 15 years or 1.3% over 20 years.

http://www.meilleurtaux.com/credit-immobilier/barometre-des-taux.html

(or if you want a cheaper deal you could go for 0,80% variable over 20 years, but as opposed to Ireland there is a cap and it can at most be increased by 1 percentage point to 1.8% which I think comes in exchange for the fact that you might be charged early repayment fees if you want to increase your monthly repayments but those are not crazy amounts)

Ardennes1944

The_Conductor wrote: »

In an Irish context- I'm not sure that we do 10 year fixed packages- however, you're looking at 4%+ for a 4-5 year term (its the highest in Europe). I wasn't aware you could get a 1.1% on 10 year fixed in Switzerland- it sort of is a bit no brainer to buy at these sort of rates- when you factor inflation into the equation, they are paying you to borrow money.......... If you allowed a salary multiple of 3- you might get a small apartment in a reasonably central location- however, nothing you'd write home about- so I suppose the Swiss situation isn't a million miles from the Irish situation- just on a different scale.

Thats what he said, its essentially free money!

The_Conductor

Bob24 wrote: »

Yes we are really getting screwed here. To remain with the EU/eurozone, in France you could get 1.05% fixed over 15 years or 1.3% over 20 years.

Aka- the law abiding and compliant people who pay their debts and maintain normal financial positions- get reefed because of government policy of never, ever, under any circumstance, forcing someone from the family home- for non-payment of their mortgages. Yes- Irish lenders have a cash cow in Irish consumers- however, they also have to factor a cost into their equation for the length of time it can take them to foreclose on an asset on which a mortgage or loan is secured.

So- the law abiding and prudent members of society- once again- bail out the profligiant and wilder elements of society- on the basis that it suits our politicians to make normal mortgage implementation as hard as possible in the Irish market- verus other markets.

Probably the reason why we don't have a string of foreign lenders queuing up for Irish banking licences- even when they can effectively source money for nothing.

Bob24

The_Conductor wrote: »

Probably the reason why we don't have a string of foreign lenders queuing up for Irish banking licences- even when they can effectively source money for nothing.

Yes we have to get real (some of us are but not everyone): if we are getting bad rates it is not just because our banks are inefficient and greedy (they are but so are most banks at least for the greedy aspect, it is pretty much their line of business to be greedy).
It also is because as you mention market conditions are different here due to our laws and government policies, otherwise of course those banks who have access to cash to lend at 1-1.5% fixed elsewhere with a profit would jump at the Irish market where they could charge twice as much and still be offering the best deals on the market.

cnocbui

DIRT - the most appropriately named tax ever - clearly signals what the government thinks about financial prudence or restraint.

How DARE you save money! We'll have at that to teach you a lesson.

theboringfox

Very interesting that rates not coming down or other banks not flooding in.

We compare ourselves to European market but if we looked at UK which has similar lawd and regulations our rates are comparable.

I'm always very surprised by the mortgage rates quoted for Eurozone. Seem ridiculously low.

Samuel T. Cogley

Just adds more credibility to the opinion we're a tiny basket case market! :pac:

draiochtanois

This post has been deleted.

6541

draiochtanois wrote: »

This post has been deleted.

That is some property for that money.

Samuel T. Cogley

6541 wrote: »

That is some property for that money.

LOL about the management fee on a decent two bed c. 70sqm apartment here.

Why am I still here. :pac:

myshirt

To buy an average house in times gone by, what type of multiples of the average income were you talking?

Less than 2.

Whereas now it is nearly 8, albeit at much, much lower interest rate. Every generation has their challenges, but this one is up against it without parental assistance or familial wealth to leverage.

That bog standard 3,500 sq foot house in Killiney still alludes.

jamesthepeach

myshirt wrote: »

To buy an average house in times gone by, what type of multiples of the average income were you talking?

Less than 2.

Whereas now it is nearly 8, albeit at much, much lower interest rate. Every generation has their challenges, but this one is up against it without parental assistance or familial wealth to leverage.

That bog standard 3,500 sq foot house in Killiney still alludes.

1998
£105,000 - New build smallish 3 bed semi in Bray.
8% interest rate. 25 year mortgage.
Salary was £18,000, which was quite a good salary at the time.
I needed £10000 deposit and a record of saving for the previous 3 years in BS I got the loan from.

Monife

jamesthepeach wrote: »

1998
£105,000 - New build smallish 3 bed semi in Bray.
8% interest rate. 25 year mortgage.
Salary was £18,000, which was quite a good salary at the time.
I needed £10000 deposit and a record of saving for the previous 3 years in BS I got the loan from.

My mum bought a decent enough small 3 bed semi-d in Bray at the same time for £50k (second hand). Salary about £20/25k at the time.

jamesthepeach

Monife wrote: »

My mum bought a decent enough small 3 bed semi-d in Bray at the same time for £50k (second hand). Salary about £20/25k at the time.

Where abouts in bray was that house?
The one I bought was Hollybrook park and was the cheapest I could find that wasnt falling down. The were a few on sale a bit cheaper but they were really badly built ex council houses from the 70s in bad areas and had no heating etc and were tiny.

Cyrus

jamesthepeach wrote: »

1998
£105,000 - New build smallish 3 bed semi in Bray.
8% interest rate. 25 year mortgage.
Salary was £18,000, which was quite a good salary at the time.
I needed £10000 deposit and a record of saving for the previous 3 years in BS I got the loan from.

so a mortgage of 5.3x your salary

it seems that things werent so rosy in the past then either :P

jamesthepeach

Cyrus wrote: »

so a mortgage of 5.3x your salary

it seems that things werent so rosy in the past then either :P

As I've said many times before, but you might as well be talking to a wall as a person born after 1990 tbh. Everyone thinks their generation somehow had it harder than previous generations. No point trying to get them to see that though. That only comes with maturity. The older you get the more important the voice of your parents becomes as you come to realize they actually have been through it all and you haven't.

Cyrus

jamesthepeach wrote: »

As I've said many times before, but you might as well be talking to a wall as a person born after 1990 tbh. Everyone thinks their generation somehow had it harder than previous generations. No point trying to get them to see that though. That only comes with maturity. The older you get the more important the voice of your parents becomes as you come to realize they actually have been through it all and you haven't.

but but but

exams are harder now than they were when you did them

Bob24

jamesthepeach wrote: »

As I've said many times before, but you might as well be talking to a wall as a person born after 1990 tbh. Everyone thinks their generation somehow had it harder than previous generations. No point trying to get them to see that though. That only comes with maturity. The older you get the more important the voice of your parents becomes as you come to realize they actually have been through it all and you haven't.

Agree with you about post 90s being a bit out of touch (but I'm not sure if it's specific to their generation or a phase of life others generation have gone through at their age).

Having said that, we discussed it before but there is also a tendency in older generations to forget that things can't be compared like for like. Ireland might be a specific case but in the western world between the 50s and 80s the economy was booming with less unemployment, and more importantly wage increases and inflation were much stronger than their are now. Meaning overtime a mortgage would become *much* easier to repay which is not that true at the moment. So comparing salary multiples at the time of getting the mortage is only looking at one part of the facts.

jamesthepeach

Cyrus wrote: »

but but but

exams are harder now than they were when you did them

What exams?
I wasn't allowed to go to uni until I was 23.
Lucky enough to get to go then though.

Monife

jamesthepeach wrote: »

Where abouts in bray was that house?
The one I bought was Hollybrook park and was the cheapest I could find that wasnt falling down. The were a few on sale a bit cheaper but they were really badly built ex council houses from the 70s in bad areas and had no heating etc and were tiny.

Not a council area and in fine (albeit a bit dated) condition. Richmond Park on the Herbert road near the dual carriageway.

jamesthepeach

Bob24 wrote: »

Agree with you about post 90s being a bit out of touch (but I'm not sure if it's specific to their generation or a phase of life others generation have gone through at their age).

Having said that, we discussed it before but there is also a tendency in older generations to forget that things can't be compared like for like. Ireland might be a specific case but in the western world between the 50s and 80s the economy was booming with less unemployment, and more importantly wage increases and inflation were much stronger than their are now. Meaning overtime a mortgage would become *much* easier to repay which is not that true at the moment. So comparing salary multiples at the time of getting the mortage is only looking at one part of the facts.

All I'm saying is that it was never easy to buy a house on an average wage. People seem to think that it should be easy now. It's not.

Today's problem is that average wage has been replaced by average household income, which has a knock on effect on affordability and property prices.

jamesthepeach

Monife wrote: »

Not a council area and in fine (albeit a bit dated) condition. Richmond Park on the Herbert road near the dual carriageway.

Funny. My friend bought there the year after I did. And it cost a hell of a lot more than my house. Nice area. Built in the 80s.

The_Conductor

The_Conductor wrote: »

................. Yes- Irish lenders have a cash cow in Irish consumers- however, they also have to factor a cost into their equation for the length of time it can take them to foreclose on an asset on which a mortgage or loan is secured........................

Probably the reason why we don't have a string of foreign lenders queuing up for Irish banking licences- even when they can effectively source money for nothing.

It's a funny one.
I would think it quite easy for a lender to cherry pick a decent amount of folks for switcher mortgages.
A professional (an actual one) or a couple not in negative equity, who don't have mortgaged non residential property, who have been employed continuously since leaving education pre 2008 recession etc etc etc