Property Market 2018

awec

Bob24 wrote: »

Yeah that's the thing. He states that "I think there is definitely a supply issue and once that supply issue is corrected — the Government is saying it is going to build half a million houses by 2040 — those buying houses today are going to be deeply affected.".

I would agree a combination of supply overshooting, interest rates rising, and external factor negatively affecting the economy are likely to at some point affect the property market (when and to which extend is very hard to predict however).

But when he give an outlook of 2040, what exactly is he saying? Don't be now and hold off off for another 20 years? :-)

Well the government plan is to build 500,000 houses by 2040, the plan isn't to build all 500,000 in 2039.

2040 is 22 years away, so the government need to build ~23,000 houses a year to meet their target. I think that's an increase on where we are today, but not completely unrealistic.

I think his point is there may be a marked increase in supply in the not-too-distant future. Of course whether or not it actually happens remains to be seen.

Bob24

awec wrote: »

Well the government plan is to build 500,000 houses by 2040, the plan isn't to build all 500,000 in 2039.

2040 is 22 years away, so the government need to build ~23,000 houses a year to meet their target. I think that's an increase on where we are today, but not completely unrealistic.

I think his point is there may be a marked increase in supply in the not-too-distant future. Of course whether or not it actually happens remains to be seen.

Of course I get that, but my point is more that his statement is very vague and based on a very long outlook. I.e. at which point does he think supply will overshoot and trigger price drops, and based on what arguments (which will need to include the current backlog and population growth forecasts). If he thinks it will happen in the next 2-3 years and can explain why it might make sense to tell people to wait, but if he thinks it might take 20 years or has not real argument to explain when he sees it coming, it’s a bit useless to tell people to wait.

Garphiel

awec wrote: »

Well the government plan is to build 500,000 houses by 2040, the plan isn't to build all 500,000 in 2039.

2040 is 22 years away, so the government need to build ~23,000 houses a year to meet their target. I think that's an increase on where we are today, but not completely unrealistic.

I think his point is there may be a marked increase in supply in the not-too-distant future. Of course whether or not it actually happens remains to be seen.

I think that 'expert' writing for the Irish Mirror is taking a very simplistic view with his predictions.

For instance CSO predict by 2046 our population will increase to 6.7 million. That's nearly 2 million more people who need housing. Building 500,000 homes between now and then will barely address current demand levels, never mind future demand.

Also, as of October 2017, Irish households had over 100 billion euro on deposit in banks. Rising interest rates would hugely benefit those people, giving them more cash to buy houses/apartments for investment or homes for their children, etc. Even a 1% rise in interest rates would add another 1 billion euro per year to the populations spending power.
Edit - For comparison, total Irish household debt is 141 billion euro as of February 2018.
A large rise in interest rates would essentially transfer huge amounts of wealth from the debt-holders to deposit-holders of our country, or to put it another way from those who owe the 141 billion debt to those who own the 100 billion on deposit. (I'm sure there's some crossover between those 2 groups also)

The 2 points he's arguing will cause property prices to crash, could potentially have the opposite effect.

myshirt

Let's hope those 500,000 houses are not 500,000 one-off houses, because since 1990 that's exactly what we built. 500,000 one-off houses. That's the entire size of Wexford dedicated to gardens.

If you read any analysis by Ronan Lyons, and I recommend people do, the guy plays this with a straight bat. Ireland is more highly educated. To use those skills, we must cluster. Couple this with the fact our home sizes are changing from 5-6 people to 2-3 people in an urban and city location. What do we need to cope with this?

Apartments.

What do Irish people not like?

Apartments.

What does our planning and county development plans plan for?

Lots of semi detached and large one off houses.


We are good at some things in this country, but we are appalling at planning. If we could take off the county jerseys here and use a bit of brains, we wouldn't build a single more one off house.

manniot2

manniot2 wrote: »

I never mentioned places that need gentrification. By closer to the city I meant inside the M50 basically...........

Inchicore, Crumlin, Dolphin's Barn etc etc

OwlsZat

People are spending nearly half a million for bang average 3 bedroom houses in Inchicore. If that doesn't worry you nothing will.

manniot2

I was going through the mortgage process recently and was recommended a broker to talk to. He dealt with all the major banks. Despite all the talk of interest rate hikes, he was really pushing going variable. He was adamant that the competition among the banks will cause decreases in the coming years.
Was wondering if anyone had the same experience? and why he might be pushing variable if the general consensus is that rates are going up? Could it be related to the commission he gets from the banks for getting a customer to go variable?

Shedite27

myshirt wrote: »

Let's hope those 500,000 houses are not 500,000 one-off houses, because since 1990 that's exactly what we built. 500,000 one-off houses. That's the entire size of Wexford dedicated to gardens.

If you read any analysis by Ronan Lyons, and I recommend people do, the guy plays this with a straight bat. Ireland is more highly educated. To use those skills, we must cluster. Couple this with the fact our home sizes are changing from 5-6 people to 2-3 people in an urban and city location. What do we need to cope with this?
Apartments.

What do Irish people not like?
Apartments.

What does our planning and county development plans plan for?
Lots of semi detached and large one off houses.

We are good at some things in this country, but we are appalling at planning. If we could take off the county jerseys here and use a bit of brains, we wouldn't build a single more one off house.

The one-off houses aren't government-built houses.

Who cares if the size of Wexford is gardens, it's not like land is scarce.

The 500k houses need to be more compact in cities. The private houses in the country can be whatever that private individual wants to build

Sleepy

Well, no. Every new one-off in the countryside adds to the burden that rural dwellers place on their (sub)urban counterparts, reducing the government's ability to provide adequate public transport and services to the population. Unless a demonstrable need (e.g. a working farm that requires the full-time attention of the farmer seeking plannin ) can be reasonably proven for a rural build, planning should be refused.

Ronaldinho

Sleepy wrote: »

Well, no. Every new one-off in the countryside adds to the burden that rural dwellers place on their (sub)urban counterparts, reducing the government's ability to provide adequate public transport and services to the population. Unless a demonstrable need (e.g. a working farm that requires the full-time attention of the farmer seeking plannin ) can be reasonably proven for a rural build, planning should be refused.

What burden?

Your attitude seems a lot like urban Californians who look at the rest of the state as their park, not recognising that there are people that live there and rely on it for their livelihoods.

autumnbelle

manniot2 wrote: »

I was going through the mortgage process recently and was recommended a broker to talk to. He dealt with all the major banks. Despite all the talk of interest rate hikes, he was really pushing going variable. He was adamant that the competition among the banks will cause decreases in the coming years.
Was wondering if anyone had the same experience? and why he might be pushing variable if the general consensus is that rates are going up? Could it be related to the commission he gets from the banks for getting a customer to go variable?

Would love to know this too, was told that we could go fixed at anytime we want so why not go variable

MayoSalmon

Ronaldinho wrote: »

What burden?

The subsiding your lifestyle burden

https://www.irishtimes.com/opinion/lifestyle-of-rural-dwellers-imposes-more-costs-on-wider-society-1.524557

Sleepy

Ronaldinho wrote: »

What burden?

Your attitude seems a lot like urban Californians who look at the rest of the state as their park, not recognising that there are people that live there and rely on it for their livelihoods.

Provision of public services to rural dwellers generally costs more than they contribute to the exchequer, hence the right to develop in such areas should be reserved for those whose rural existence is necessary for the maintenance of our food supply etc, not simply for those who want to live in a cheap McMansion.

Cuddlesworth

Well I can ignore the next 50 posts then.

Sleepy

autumnbelle wrote: »

Would love to know this too, was told that we could go fixed at anytime we want so why not go variable

Given that I just saved €185 a month via an LTV change and a move to a fixed rate, I'm guessing brokers received a higher incentive for selling SVR mortgages!

OwlsZat

MayoSalmon wrote: »

The subsiding your lifestyle burden

https://www.irishtimes.com/opinion/lifestyle-of-rural-dwellers-imposes-more-costs-on-wider-society-1.524557

An article from 6 years all about farmers. Are you actually serious?

Frankie19

manniot2 wrote: »

I was going through the mortgage process recently and was recommended a broker to talk to. He dealt with all the major banks. Despite all the talk of interest rate hikes, he was really pushing going variable. He was adamant that the competition among the banks will cause decreases in the coming years.
Was wondering if anyone had the same experience? and why he might be pushing variable if the general consensus is that rates are going up? Could it be related to the commission he gets from the banks for getting a customer to go variable?

Going through the mortgage process myself and we were told by one lender that they expected variable rates to fall in the coming months as banks look to compete more with each other.

Zenify

Frankie19 wrote: »

Going through the mortgage process myself and we were told by one lender that they expected variable rates to fall in the coming months as banks look to compete more with each other.

It's a TRAP

Q&A

Frankie19 wrote: »

Going through the mortgage process myself and we were told by one lender that they expected variable rates to fall in the coming months as banks look to compete more with each other.

Which bank was this? The likes of BOI and EBS have rather high variable rates compared to other banks so there is more scope to cut there but that's only to bring them in line with others.

In saying that with all the talk of rates going up the focus is on fixed rates. According to the central bank more than half the mortgages given out on recent months have been fixed.

If I was a bank I wouldn't go near my variable rate. By knocking a .1% off my variable rate I'd lose that on all my loans. You'd have to be doing a hell of a lot of new business to make it worthwhile and they simply aren't.

As for why mortgage brokers are going variable rather than fixed, might it be to encourage repeat business when rates go up and people aren't happy.

The_Conductor

Frankie19 wrote: »

Going through the mortgage process myself and we were told by one lender that they expected variable rates to fall in the coming months as banks look to compete more with each other.

There are a few developments coming down the tracks- including a ban on 2% back and other 'incentives' and 'offers' which certain lenders have used extensively to drive new lending (BOI and EBS- most aggressively). Its inevitable that these hairbrained schemes- which were paid for from higher SVR rates- will end- which will leave some leeway for a short term reduction in standard variable rates IF the lenders choose to compete in this manner.

The trend, however, is for SVRs and all other rates- to increase- and the European Central Bank are already tightening supply (and will fully close off on QE before the end of Q3 in this year). The minutes from the last ECB meeting- show 'normalisation' of interest rates- is on the agenda. Historically this was considered to be an overnight rate of 4-4.5%, in a modern context it is debated by many commentators (such as The Economist, The FT, WSJ and others)- that this is more likely a quite fast increase to around 2.5% (with possibly 3-4 increases over a 12-18 month period) before there may be a breather and reassessment of what is happening at a macroeconomic level.

The old bugbear of most Central Banks- has been inflation- which historically has been controlled by interest rates- however, and despite unprecedented volumes of cheap money- while there are bloody obvious bubbles in some sectors (such as equities, sovereign debt and then of course asset classes like housing)- the headline inflation rates even in the Eurozone- who have been slower to turn off the taps than have been the authorities in other regions, have remained strangely muted. This is presenting economists with a conundrum- as if there is a downturn- and its increasingly speculated that we are on the cusp of one- economies with heavy levels of private sector debt (such as the US- and also ironically, Ireland (we have the 3rd highest leval globally- after the US and Japan))- the economies will be eviscerated.

The Irish housing market- has a structural cost issue- our cost of building is so out of the realms of normalcy with pretty much any other country- and we have binged on debt- both public and private debt- the public side of the debt issue- is funded with hikes in all manner of direct and indirect taxes.

Some Irish commentators are suggesting that LPT could be the goose that lays the golden egg for the Irish exchequer- it is not plausible that any other taxes are going to make up the deficit that is going to increase.......... We are going to need an additional 7-8 billion a year- just to pay interest on our national debt- as the 1-2 of QE easing and interest rates- cause a hike in the cost of servicing Ireland's sovereign debt. The 'artificially low' LPT levels- could (apparently) by increased up to 4 fold- and restructured to include the square footage of property, site sizes, the value of the property- and a vastly increased discretionary increase/decrease on the part of the local authorities...............

One way or the other- we are currently partying like its 1999- even the people who were prudent last time round- are telling themselves- why bother- last time round, no good deed went unpunished- and if people who haven't paid their mortgages in over a decade still haven't been foreclosed on- and paying rent is wholly voluntary on the part of tenants- sure why would any fool bother?

The whole concept of prudence- has been pummeled to death, and then shat on from ahigh. Workers are paying on average- twice as much per head in payroll taxes- as they were in 2007- and we've just told a whole generation not to expect any assistance when it comes to time to retire. So- sure, lets party- if anything goes wrong- our loony lefties will ensure there are no consequences for whoever gets caught out...........

Against this startling backdrop- we have independent financial advisers suggesting to folk that SVRs are liable to fall- why not take out more floating debt? Yes- is the short and simple- there will be a small amount of play when the cash-back offers are finally outlawed later this year- however- its limited in nature- and its being paid for by all borrowers at the moment- not just those who qualify for the largess. So- suggesting that there will suddenly be a couple of grand for a new borrower- possibly in lower rates- because the current crop of incentives are being banned- is myopic- and depends entirely on how (and whether) the lenders decide to compete with one another.

When we look at the UK and the inredible act of self-harm they have done themselves with Brexit- and congratulate ourselves on not being as stupid as they are- well, sorry, we certainly are- we're just a different type of stupid- a special Irish type of stupid- where the great unwashed public has been conditioned to believe in a never ending party- and zero consequences for the ridiculous financial decisions that they make. Who'd want to be naysayer though- ringing a bell on the street corner- calling 'the end is nigh.............' The end is nigh!

Q&A

The_Conductor wrote: »

There are a few developments coming down the tracks- including a ban on 2% back and other 'incentives' and 'offers' which certain lenders have used extensively to drive new lending (BOI and EBS- most aggressively). /quote]

I for one will miss these incentives. For the reasonably informed that represented a handy way to make a few bob by taking the money and running to a new lender. I appreciate it requires a bit of effort on the borrowers side but it was there for the taking.

I understand why there is talk about removing these incentives. Different rates, duration and other terminology make it all a little confusing for the financially illiterate in understanding what the actual costs are before you muddy the water further. However, would the focus not be better spent educating people rather than trying to dumb it down. You're not allowed get behind a wheel of a car without sitting a test why not the same for borrowing large sums of money.

Bob24

Q&A wrote: »

I for one will miss these incentives. For the reasonably informed that represented a handy way to make a few bob by taking the money and running to a new lender. I appreciate it requires a bit of effort on the borrowers side but it was there for the taking.

I understand why there is talk about removing these incentives. Different rates, duration and other terminology make it all a little confusing for the financially illiterate in understanding what the actual costs are before you muddy the water further. However, would the focus not be better spent educating people rather than trying to dumb it down. You're not allowed get behind a wheel of a car without sitting a test why not the same for borrowing large sums of money.

For me a good reason to remove them is that in a way cash incentives circumvent lending rules: when there is regulation for borrowers to require minimum deposits, a lender shouldn’t be allowed to make any payment to someone because that person is taking a loan from them.

I know the amounts are relatively small, but I still have a problem with it in principle.

Q&A

Bob24 wrote: »

For me a good reason to remove them is that in a way cash incentives circumvent lending rules: when there is regulation for borrowers to require minimum deposits, a lender shouldn’t be allowed to make any payment to someone because that person is taking a loan from them.

I know the amounts are relatively small, but I still have a problem with it in principle.

I dont think that is the case. Typically the cash takes a month to hit your account after you've drawn down the mortgage. To be central Bank compliant you would need the full deposit in the first place or an exemption.

Looking at it this way it would be ironic if the State banded banks 2% offers While at the same time continued to offer it's 5% offer. I know it's apples and oranges but both impact people's incentives and not necessarily for the betterment of all.

Bob24

Q&A wrote: »

I dont think that is the case. Typically the cash takes a month to hit your account after you've drawn down the mortgage. To be central Bank compliant you would need the full deposit in the first place or an exemption.

Looking at it this way it would be ironic if the State banded banks 2% offers While at the same time continued to offer it's 5% offer. I know it's apples and oranges but both impact people's incentives and not necessarily for the betterment of all.

Yes to be clear I have said before and still think that any type of cash grant offered by the state is also a way to circumvent the CBI’s authority and regulations.

Of course I am not saying these things are technically illegal, what I am saying is that in principle they are going against the intend of the regulation and should thus not be accepted.

The_Conductor

The_Conductor wrote: »

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

One way or the other- we are currently partying like its 1999- even the people who were prudent last time round- are telling themselves- why bother- last time round, no good deed went unpunished-...............

A baffling view.
Folk are spending lots on rent and lots on various income taxes, new car sales aren't really high this year, there's a supply issue of property.

There's little to no party really.

Wanderer78

Augeo wrote:

A baffling view. Folk are spending lots on rent and lots on various income taxes, new car sales aren't really high this year, there's a supply issue of property.

Augeo wrote:

There's little to no party really.

I'd actually largely agree with this, but I'd imagine some are partying, I fear all this will implode when the qe taps are turned off and interest rates get yanked up, I suspect many families will quickly find themselves in serious trouble, and since there's little or no movements being made on the supply side, some will also find themselves homeless

autumnbelle

Wanderer78 wrote: »

I'd actually largely agree with this, but I'd imagine some are partying, I fear all this will implode when the qe taps are turned off and interest rates get yanked up, I suspect many families will quickly find themselves in serious trouble, and since there's little or no movements being made on the supply side, some will also find themselves homeless

Fully agree with this, madness to think people can sustain the mortgage repayments that they are going to have until they are 65- 70 scares the daylights out of me! But people are being left with little or no choice. The amount of us all who are trying to get deposits together and away from paying crazy rents... no parties for us!!

Wanderer78

Wanderer78 wrote: »

I'd actually largely agree with this, but I'd imagine some are partying............

Some partied all the way through the last 10 to 15 years
Many of them could actually afford to.

Frankie19

Q&A wrote: »

Which bank was this? The likes of BOI and EBS have rather high variable rates compared to other banks so there is more scope to cut there but that's only to bring them in line with others.

In saying that with all the talk of rates going up the focus is on fixed rates. According to the central bank more than half the mortgages given out on recent months have been fixed.

If I was a bank I wouldn't go near my variable rate. By knocking a .1% off my variable rate I'd lose that on all my loans. You'd have to be doing a hell of a lot of new business to make it worthwhile and they simply aren't.

As for why mortgage brokers are going variable rather than fixed, might it be to encourage repeat business when rates go up and people aren't happy.

It was ebs so perhaps your right in they have more scope to move. Currently with ebs at the moment and looking to move mortgage to get a better rate so he was probably hoping we would stay if we though it would come down

Frankie19

Zenify wrote: »

It's a TRAP

Whole thing is a trap! Finding it harder to get a new mortgage now with two incomes compared to a one income mortgage in 2010.