Dublin is insanity- why did I come back?

Browney7

Interested Observer wrote: »

Errr... huh?

If the mortgage was more expensive than the rent then the landlord would be losing money every month. I mean almost by definition should the rent not be higher than the mortgage on an equivalent property?

I sense this is going to turn into a capital versus interest repayment debate yet again!

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Shelga

The place is now €234k... agent pitting us all against each other- maybe I’m done with Dublin.

Sleeper12

Interested Observer wrote: »

Errr... huh?

If the mortgage was more expensive than the rent then the landlord would be losing money every month. I mean almost by definition should the rent not be higher than the mortgage on an equivalent property?

No the landlord would be making a profit. Buying the property is the investment and the payments are separate to profit LL owns the property at the end of mortgage.

Interested Observer

Sleeper12 wrote: »

No the landlord would be making a profit. Buying the property is the investment and the payments are separate to profit LL owns the property at the end of mortgage.

Ok sure. But do landlords rent out properties for less than they're paying each month on that property? I doubt it, unless they have absolutely no choice.

The point I was trying to make anyway is I don't find it mental at all that mortgages are cheaper than rent. It seems fairly normal to me.

Shelga wrote: »

The place is now €234k... agent pitting us all against each other- maybe I’m done with Dublin.

I don't really know why you thought the process would be easy or you'd just buy (quite literally) the first place you laid eyes on.

Sleeper12

Interested Observer wrote:

Ok sure. But do landlords rent out properties for less than they're paying each month on that property? I doubt it, unless they have absolutely no choice.

In some cases yes. I see what you mean. In rare cases, when everything crashed inc rents in 2008. Some poor unfortunates, accidentally LL were renting out their homes, possibly living back in the parents house and having to top up the rent received each month to meet mortgage payments.

It wouldn't be the norm though. Point taken

commited

Considering it's only the first one you've looked at, you'll kiss a lot more frogs from my experience.
Keep your eye out for any new builds that fall into your affordability - no risk of bidding war, no maintenance costs for first few years (apart from std service charge!) and 5% of purchase price (max 20k) back from the gov.

Also banks are able to breach the 3.5x multiple for 20% of cases, so consider looking at spending a bit more to get into a 3 bed that would allow you to rent a couple of rooms and earn €14k/year tax free.

loyatemu

super_furry wrote: »

As a couple you can double that and suddenly there’s so much more open to you.

no you can't, no bank will lend you double the combined incomes. And if you have kids they start knocking huge amounts off your limit.

as for the whole 30 years ago thing - I think the main factor is an increase in households, without an equivalent increase in buildings. There are far more single people owning property now (less people per home), and the population has nearly doubled since the 70s - it's supply and demand ultimately. The main price increases occurred between about 1992 and 2002 - if you bought before that you're golden.

We really need more apartments; people in the 20s/early 30s should be buying apartments and then trading up; whilst older people should be able to trade down to serviced apartments later in life. Unfortunately the crappy quality of most Irish apartments and the huge hit they took in value during the crash has really put people off buying them and developers are reluctant to build them as a result.

Interested Observer

loyatemu wrote: »

no you can't, no bank will lend you double the combined incomes. And if you have kids they start knocking huge amounts off your limit.

You're right, they'll lend you 3.5 times your combined incomes.

pilly

Shelga wrote: »

The place is now €234k... agent pitting us all against each other- maybe I’m done with Dublin.

You're giving up far too easy. Don't be ridiculous now, it's one property. People have already given you lovely examples of houses within your price range, have you even looked at them?

super_furry

loyatemu wrote: »

no you can't, no bank will lend you double the combined incomes. And if you have kids they start knocking huge amounts off your limit.

They'll lend you 3.5 times the combined incomes. If you're earning 50k on your own, they'll lend you €175k. If you and your partner and both earning 50k, they'll lend you €350k.

pilly

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Well you're going further back than my parents generation because I know both of them worked.

loyatemu

Interested Observer wrote: »

You're right, they'll lend you 3.5 times your combined incomes.

back in the day it was 3.5 or 4 times the higher earner, plus 1 times the lower earner. But it seems this has changed (not sure this is a good idea tbh)

super_furry wrote: »

They'll lend you 3.5 times the combined incomes. If you're earning 50k on your own, they'll lend you €175k. If you and your partner and both earning 50k, they'll lend you €350k.

yes, I was wrong there, seems crazy but I just checked AIB's calculator and it's correct. Still won't buy you much which illustrates how mad the market is.

GingerLily

loyatemu wrote: »

back in the day it was 3.5 or 4 times the higher earner, plus 1 times the lower earner. But it seems this has changed (not sure this is a good idea tbh)



yes, I was wrong there, seems crazy but I just checked AIB's calculator and it's correct. Still won't buy you much which illustrates how mad the market is.

Where have you been that you don't know this? It's literally in the news all the time!

Shelga

Giving up far too easily by accepting that I could have afforded 190k but not 234k? Should I be panicking completely and chucking out a bid I know I can’t afford?

I absolutely did not think it would be easy. I’m saying that this is my first foray into the horrible world of buying, and I’m realising that €45k over the asking price is the new norm. I expected €20-30k over asking.

I’m fully prepared to view as many properties as I need to and in every area in the greater Dublin area. My only red line is I won’t buy a 1 bed as you’re giving yourself no flexibility whatsoever.

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Ohmeha

flaneur wrote: »

We really need to get out of this notion that houses are for speculation. It's sucking a vast amount of money out of the economy that could be flowing around. When it's spent on property, it's typically going to service a large mortgage and that money's effectively going right out of the system as the banks are borrowing on the international markets.

Imagine how much nicer the place would be if 50% more disposable income were sloshing around in the real economy... Or, being invested in real businesses ...

This is exactly what happened between 2003-2007 and all the exclusive blame for the bubble bursting was on the excess credit lent by Banks and Lehman Brothers etc - as you rightly point out a huge factor in the collapse of the economy following these insanely stupid years was too much money was diverted from real productive economic growth sectors into the black hole abyss of Ireland's unsustainable dysfunctional property market and into Landlords pockets.

Apparently 'this time is different' '2007 was just a blip' according to the Government, NAMA, Central Bank and all the vested interests because they think they have been really clever this time rigging the market by restricting supply to boost housing & rental prices back to what they deem was always totally normal and safe for the economy in 2007.

Shelga

My budget is 220k. I thought €30k was enough wiggle room at that level. I was wrong.

BrokenArrows

Interested Observer wrote: »

Errr... huh?

If the mortgage was more expensive than the rent then the landlord would be losing money every month. I mean almost by definition should the rent not be higher than the mortgage on an equivalent property?

In a reasonable society the rent should be cheaper than owning.
When rent is more than the mortgage the landlord is basically getting a free ride.

If we want to get out of the situation where owning a property is a MUST HAVE then rent has to be lower than a mortgage repayment.

In the current scenario can you imagine reaching pension age and still having to pay the market rate on rent because you could never afford to buy? A lot of people barely make rent at the moment and you think they will make rent on a private pension never mind the state pension!
Then you still get turfed out every few years because the landlord decides to sell or renovate.

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Cuddlesworth

super_furry wrote: »

Mortgage repayments on a €450k loan over 30 years will be just under €2k a month. You can’t rent a three-bedroom house for that in most areas in Dublin at this stage. It's mental that it's cheaper to have a mortgage than to rent.

House insurance? Mortgage Assurance? Property Tax? Household maintenance? The buck doesn't stop at the mortgage payments.

pilly

Shelga wrote: »

Giving up far too easily by accepting that I could have afforded 190k but not 234k? Should I be panicking completely and chucking out a bid I know I can’t afford?

I absolutely did not think it would be easy. I’m saying that this is my first foray into the horrible world of buying, and I’m realising that €45k over the asking price is the new norm. I expected €20-30k over asking.

I’m fully prepared to view as many properties as I need to and in every area in the greater Dublin area. My only red line is I won’t buy a 1 bed as you’re giving yourself no flexibility whatsoever.

You said you were giving up on Dublin, not just that bid.

zulutango

I'm so glad I moved from Dublin to Limerick a few years back. Property prices are still pretty ok here and the quality of life is very good for a low cost of living. A lot of people seem to be catching on to it though because even though the prices are low, they are rising faster than anywhere else.

dont bother

OP have you considered Balbriggan? you could get a 3 bed semi D out there for the same price as a one bedroom box in ballymun or finglas. not a very competitive market either and it's on train line for city centre (40 mins journey) and by the sea and it's a nice village/town in itself.

it's considered a "commuter town" but it's actually VERY handy for town compared to other "commuter town" areas.

i'd seriously consider it. Rush and Skerries are other options if you're set on wanting a house - but the convenience for train in Rush is not great - as it's a good 20 minute walk down a country road, or a 7euro taxi from town to station.

Skerries is a bit more pricey too - as is rush, so Balbriggan would be the best bet. only 40 mins to town on train - 25 mins to airport etc etc. you cant go wrong.

me, i bought my gaff, it has now doubled in price and i am in positive equity by over twice my mortgage amount - so i'm selling it and using the profit to buy two gaffs in spain somewhere - one to live in, one to Airbnb. fvck this kip of a country. it's only going to get worse i think

Shelga

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Yes I see that now. Yes I have money for fees, furniture etc.

I would consider Balbriggan as another poster mentioned- I just know no one there and would feel quite isolated I think. Ruling nothing out though. :-/

LirW

I can see where you're coming from. You just started looking but it is grim.
We closed on our house in August and spent 10 months looking. Started in Dublin in the areas you mentioned, the bidding wars we've seen were beyond depressing (were following on 20 odd houses).
We then started to look in Dundalk, where bidding in our budget was equally insane.

We ended up buying a house in South Wicklow pretty cheap and just did it up. Even though it was a huge move it paid off already because we have he nicest neighbors and the most welcoming community here.

My point is if you feel priced out you have two choices: Stay put or expand the search to the outskirts of Dublin. There is no point in compromising on a 1bed in Ballymun when you can have more bang for your buck with a bit more travel time. It's the biggest purchase of your life after all.

You just started, do your homework and research, don't be discouraged and take more options into account. You will come across a lot more frustrating bidding wars and price hikes but it'll pay off in the end.

April 73

Back in 1999 myself and my fiancé put a deposit on a house. It was a stretch with a mortgage at 3.5 times out income. Neither of us could have bought that house on our own & it was far from the heady prices of South County Dublin. My single income at that stage would barely have run to an apartment then. I don't think things have changed much in twenty years.

You need to stay positive OP. You're not out of the race because you've been outbid on one property. If I were you I'd stay out of bidding wars which drive up prices quickly when 2 or 3 people are bidding. Express an interest in a property, ask the EA to keep you informed but wait til the end when the bidding looks to have stopped to jump in with your bid. Otherwise you're only bidding against yourself & driving up the price.

Tigerandahalf

It is difficult to know where the market will go but buyers are being forced into a very tight situation again.

I really don't think we are in any better position than 2007. People are still paying far too much of their income on a house purchase/rent.

When interest rates go up it is going to leave an awful lot of people squeezed with very little to spend elsewhere. Will the government have to bail people out again with some form of interest relief.

A huge amount of money is tied up in housing as interest rates have been so low. A rate rise would tempt that money back.

Right across the western world from Canada to Australia/NZ and back to UK/Ire prices have risen to crazy levels. It will have to adjust at some stage as wages are nowhere near matching the growth in prices.

These prices will become a big barrier to decent birth rates as people will just realise it is not worth having that extra child.

Big threats like Brexit and Europe going after the corporate tax rate. With the UK gone we will have one less friend on our side in Europe.
If Sterling depreciates further we could lose a lot of manufacturing jobs to the UK and who knows what they will do with their corporate tax rate once out. Other countries will buy the UK's goods once they are cheaper whether they are in the EU or not.

At least if you are renting and things go bad you can bail out. But it is not easy to go down that road if you want a family and once you get that bit older it is harder to get a mortgage.

If you could get a half decent job down the country getting a mortgage might be more realistic. Businesses must be looking to push out as costs in Dublin are only going up.

There is a good road network now so you are never too far away.

LirW

Unfortunately the bigger picture doesn't help people that have a housing need now due to their age, family situation etc.
When people live with their parents, maybe even with kids, they couldn't care less about the bigger global picture and have to find a way to make it work. Some people are simply not in the position to stick it out. And the OP being in a certain age still living in house shares it's somewhat understandable that the initial shock made him anxious.

The market is also not very well prepared for the increasing demand of singles. More and more people choose to be childless or wanting an independent life on their own. Buying property shouldn't be restricted to couples in an ideal world. And the rental market has nothing to offer either with a long term prospect.

Tigerandahalf

LirW wrote: »

Unfortunately the bigger picture doesn't help people that have a housing need now due to their age, family situation etc.
When people live with their parents, maybe even with kids, they couldn't care less about the bigger global picture and have to find a way to make it work. Some people are simply not in the position to stick it out. And the OP being in a certain age still living in house shares it's somewhat understandable that the initial shock made him anxious.

The market is also not very well prepared for the increasing demand of singles. More and more people choose to be childless or wanting an independent life on their own. Buying property shouldn't be restricted to couples in an ideal world. And the rental market has nothing to offer either with a long term prospect.

True but I'd imagine a single person would want maybe an extra room so 2 beds are probably more desirable for a lot of people with friends staying over, storage or maybe renting out a room.

The bedsit market is probably not catered for in fairness since they banned it. But I think that has been relaxed again some bit.