Has property gone mad again

VonLuck · 12-03-2017 9:45pm

If you look at the average industrial wage, which I believe to be around €35000 (not sure of the exact figure) and taking the mortgage lending limit of 3.5 times your salary, the maximum mortgage a single person could afford is €122,500. Add 10% on for your deposit and you get €136,000.

Now, can anyone tell me how a single person earning average, or even above average, living in Dublin could purchase a property at this price? A 2 bed property is going to set you back at least €225,000 in any area of Dublin City. That would mean you would have to have saved a whopping €102,500 by yourself!

That's a lot of scrimping for many years to be able to afford that.

Samuel T. Cogley · 12-03-2017 9:57pm

VonLuck wrote: »

If you look at the average industrial wage, which I believe to be around €35000 (not sure of the exact figure) and taking the mortgage lending limit of 3.5 times your salary, the maximum mortgage a single person could afford is €122,500. Add 10% on for your deposit and you get €132,500.

Now, can anyone tell me how a single person earning average, or even above average, living in Dublin could purchase a property at this price? A 2 bed property is going to set you back at least €225,000 in any area of Dublin City. That would mean you would have to have saved a whopping €102,500 by yourself!

That's a lot of scrimping for many years to be able to afford that.

It's more like 45K, especially in Dublin, which lands you at €157,500, 173,250 with the deposit. That puts a nice two bed in Santry at your finger tips. Alternatively a number of CC 1 beds with the required 25% deposit.

VonLuck · 12-03-2017 10:07pm

Samuel T. Cogley wrote: »

It's more like 45K, especially in Dublin, which lands you at €157,500, 173,250 with the deposit. That puts a nice two bed in Santry at your finger tips. Alternatively a number of CC 1 beds with the required 25% deposit.

€45,000? Are you sure? That would surprise me. Not to mention I was quoting an average and not the median which I would expect to be lower again.

Samuel T. Cogley · 12-03-2017 10:10pm

VonLuck wrote: »

€45,000? Are you sure? That would surprise me. Not to mention I was quoting an average and not the median which I would expect to be lower again.

TBH I get my figures off links on boards so make of it what you will. I know that a supervisor in a call centre can make about 40K so I assume once there is any sort of skilled job one would assume they'd be on more. As a retail manager my salary peaked at about 50K albeit during the last boom. I didn't get a degree until after I'd decided to retrain.

koheim · 12-03-2017 11:03pm

VonLuck wrote: »

€45,000? Are you sure? That would surprise me. Not to mention I was quoting an average and not the median which I would expect to be lower again.

In order to get a mortgage you need a full time permanent job. Average annual earnings for full-time employees in 2015 were €45,075
http://www.cso.ie/en/releasesandpublications/er/elca/earningsandlabourcostsannualdata2015/

cnocbui · 12-03-2017 11:08pm

ThisRegard wrote: »

I don't know what your point is.

My point is that "at worse your house is worth what you paid" is untrue. Anyone who bought a house around 2000 with it currently worth only the same amount now, effectively has a house that is worth 37.2 % less than it originally was.

ThisRegard · 12-03-2017 11:31pm

cnocbui wrote: »

My point is that "at worse your house is worth what you paid" is untrue. Anyone who bought a house around 2000 with it currently worth only the same amount now, effectively has a house that is worth 37.2 % less than it originally was.

It's all relative if every other property is the same, so your point is irrelevant.

VonLuck · 12-03-2017 11:32pm

koheim wrote: »

In order to get a mortgage you need a full time permanent job. Average annual earnings for full-time employees in 2015 were €45,075
http://www.cso.ie/en/releasesandpublications/er/elca/earningsandlabourcostsannualdata2015/

That makes more sense. The part-time salaries were skewing the figures I was working off.

Geuze · 13-03-2017 12:37am

VonLuck wrote: »

If you look at the average industrial wage, which

2015 data

http://www.cso.ie/en/releasesandpublications/er/elca/earningsandlabourcostsannualdata2015/

Average earnings = 36,519, or 21.90 per hour

Average for FT workers = 45,075

Average in industry, FT and PT = 44,168

alastair · 13-03-2017 3:00am

cnocbui wrote: »

My point is that "at worse your house is worth what you paid" is untrue. Anyone who bought a house around 2000 with it currently worth only the same amount now, effectively has a house that is worth 37.2 % less than it originally was.

You'd be remarkably unlucky if your 2000 purchase house was only worth what you paid for it. Coming up to the end of a 20 year mortgage this summer, and the value of the place, while still below what it would have notionally fetched in the peak bubble days, is multiples of the original purchase price, and never went remotely near negative equity - before or after allowing for inflation. Can see it for a mid-2000's place alright, but then the inflation to apply is a good deal lower too.

Samuel T. Cogley · 13-03-2017 10:24am

VonLuck wrote: »

That makes more sense. The part-time salaries were skewing the figures I was working off.

Actually though in fairness to your point 45K for someone in a call centre or retail would be made up of bonus and Overtime, so would not qualify for a mortgage.

That only just occurred to me this morning.

johnnyskeleton · 13-03-2017 12:49pm

BBMcQ wrote: »

Gone mad depends on your perception of value. But everything is currently converging on the 400-450 house price range. This is where the average couple working in Dublin would be able to get a mortgage if they have a decent deposit saved up over the last 2-5 years. There isn't much demand for property way above this mark and anything below will go shooting up to converge at approx 400.

The central bank rules ensure a lid is kept on the pot, but the lid is quite high up there for a lot of ppl.

Assuming that they are first time buyers or exceptions to the CB rules, that's a deposit of c. 60k and a mortgage of c. 360k, meaning a joint income of close to 100k.

So yeah, the lid is quite high indeed.

willbeuptuesday · 13-03-2017 4:54pm

Only saw this thread now, I posted something similar about the market going mad in Dublin in the property market thread. Long story short, a house across from mine in Lucan went on sale for €325k (about 25k above norm due to it having a garage built on the side). There was at least 200 people queuing to see this house on a Saturday. In the finish it was sold at €374k following a 4 way bidding war, all were first time buyers. The experts say 5-7% rise in Dublin but from what I have witnessed this will easily be double digit figures, they are under estimating the demand big time.

Samuel T. Cogley · 13-03-2017 7:19pm

willbeuptuesday wrote: »

Only saw this thread now, I posted something similar about the market going mad in Dublin in the property market thread. Long story short, a house across from mine in Lucan went on sale for €325k (about 25k above norm due to it having a garage built on the side). There was at least 200 people queuing to see this house on a Saturday. In the finish it was sold at €374k following a 4 way bidding war, all were first time buyers. The experts say 5-7% rise in Dublin but from what I have witnessed this will easily be double digit figures, they are under estimating the demand big time.

It's the lower end of the market going a bit bonkers now as the upper end has now hit a ceiling. People are looking at cheaper areas. They can support a higher 'overbid' in terms of money but not push the overall figure up as much as a 500K house selling at 600K.

Yourself isit · 13-03-2017 11:21pm

Geuze wrote: »

2015 data

http://www.cso.ie/en/releasesandpublications/er/elca/earningsandlabourcostsannualdata2015/

Average earnings = 36,519, or 21.90 per hour

Average for FT workers = 45,075

Average in industry, FT and PT = 44,168

I don't know why the cso uses the average and not the median unless it's a ploy to overestimate earnings.

According to this report by in the journal.

33% of households have a gross income of less than €30,000
56% of households have a gross income of less than €50,000
62% of households have a gross income below the average (mean) household income of €56,500
The top 30% of households have a gross income of more than €70,000 per annum
The top 20% of households have a gross income of more than €80,000 per annum
14% of household have a gross income above €100,000 per annum
2% of households have gross incomes above €200,000 per annum

The bit in bold highlights the problem with the use of the mean.

athtrasna · 13-03-2017 11:36pm

Mod note

Can we get back to the A&P relevant discussion please, there are other places to discuss the average wage calculations.

ThisRegard · 14-03-2017 12:13am

Average wage is relevant to how the property market may go given there's a direct correlation between the two.

athtrasna · 14-03-2017 12:28am

ThisRegard wrote: »

Average wage is relevant to how the property market may go given there's a direct correlation between the two.

How it's calculated isn't. No more please.

Mod

Geuze · 14-03-2017 2:31pm

Yes, I think property in cities has "gone mad again".

Terraced houses in Claddagh in Galway city are asking 400k.

Cunning Stunt · 15-03-2017 10:17am

I think the housing market is going a bit mad again, yeah. There are houses in my sisters estate in Athy which were built during the boom, for 170k off plans and had fallen to as low as 90k in recent years -- but now two have come on the market in the last month and sold for around 140k mark each - one was on the market for about a week, bidding war - went 40% over asking price -- the other was for sale for just a few days - those buyers met the asking price straight away.

Like most other areas there was an issue with over-supply, but different story now - it's slim pickings and houses are being snapped up as soon as they become available!

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cnocbui · 15-03-2017 11:42am

Any time people think prices have gone mad, they should work out how much it would cost to buy the land and build an equivalent structure on it. Outside of Dublin, many houses prices are madly low.

Chimera88 · 15-03-2017 4:30pm

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Absolutely, same story here- I was involved bidding on a 2 bed apartment in Dublin listed at 195, sold before Christmas for 218 and fell through.

It's now on 244k and counting in the bidding process- that seller must be thrilled the first sale fell through!

Not a good outlook for those of us trying to get on the ladder

HiGlo · 15-03-2017 10:24pm

Chimera88 wrote: »

Absolutely, same story here- I was involved bidding on a 2 bed apartment in Dublin listed at 195, sold before Christmas for 218 and fell through.

It's now on 244k and counting in the bidding process- that seller must be thrilled the first sale fell through!

Not a good outlook for those of us trying to get on the ladder

I think I know the apartment you're talking about!! haha.. I was just about to post about the exact same one....

I think I was probably bidding against you at one point! haha... I've since dropped out but the estate agent told me they've accepted the 244k bid and are expecting deposit tomorrow.

Almost €50k above ask!!! It's madness :eek:

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pilly · 16-03-2017 12:24pm

In my opinion I think FTB's have expectations that are far too high. They want their perfect house in the perfect location and if they can't have it because it's over 400k they're whinging about it.

What ever happened to living within your means? If you can't afford to live in a certain place there are hundreds of houses and apartments for sale in Dublin for much much less, I just had a look on Daft this morning with a limit of 350k and literally found hundreds.

HiGlo · 16-03-2017 12:31pm

....... wrote: »

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Hahaha, are we all talking about the same apartment?? haha :pac:

D24?

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allibastor · 16-03-2017 12:56pm

limnam wrote: »

That's an odd average.

In order to come in under LTI both would need to be earning 60k+ a year to buy at 400-450k.

Average earnings for people in full-time employment is aprox 32k a year.

12% of households have income over 100k

I've no idea who's buying these 400k+ houses but it would seem 88% of the workforce can't afford to.

Granted the figures are for 2014 so probably slightly higher now...but still it amazes me how we get to an avg of 400-450k

Average industrial wage that is.
You wont get an account/tech/senior sales etc for anything less than 50K in Dublin each.

prices are high there, but its a sefl contained market in essence as the wages needed to live there and buy there are only available there.

impr0v · 16-03-2017 6:56pm

pilly wrote: »

In my opinion I think FTB's have expectations that are far too high. They want their perfect house in the perfect location and if they can't have it because it's over 400k they're whinging about it.

What ever happened to living within your means? If you can't afford to live in a certain place there are hundreds of houses and apartments for sale in Dublin for much much less, I just had a look on Daft this morning with a limit of 350k and literally found hundreds.

This is a good point. Is social practicality or snobbery that pushes people to pay tens, maybe even hundreds of thousands, more for one house over another a mile or so away, and possibly equidistant from their place of work?

Has property gone mad again

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