Increase in population renting... ticking time bomb?

The Student

Arthur Daley wrote: »

Well if you keep asking high prices and the punter says enough!I can't afford this...then eventually you realise that prices are too high and they need to fall to clear the market.

That is what this thread and others are about. Property developers and government may deny there is an issue, but that doesn't get away from the fact that there is a very real issue of affordability out there.

If the houses are not built and affordability is an issue then why would a developer build with the uncertainty that prices might fall?

We have a supply issue at the moment, you wont increase supply if there is no profit in the private sector and the Govt are unwilling to increase supply in the social sector as they are trying to get away from supplying social housing. Affordable housing is only a step up from social housing. The question is who pays to make the housing affordable, who makes up the difference between what the market dictates the house is worth and what the purchaser actually pay's.

Public land can be given to developers to build affordable housing but the build costs (leaving aside the land costs) are too high. We insist on high building regulations which drives up costs.

TheBoyFromAus

tom1ie wrote: »

This is true. Young People have no inclination to save now. Remember the Aussie economist guy who suggested giving up coffee and smashed avacado to save a deposit, he was crucified in the press.
When I moved into my first property I slept in a sleeping bag on concrete floors s we had fcuk all money for furniture.

He was crucified because he blamed the challenges faced with buying property in Australia purely on frivolous spending. Smashed avo on toast is $10, coffee $2.50-$3. If you go out for breakfast on a saturday or sunday and have a coffee a day that is still only $1,600 a year. The median house price in Aus is around the $700k mark and you need a 20% deposit. If you give up coffee and smashed avo, you can save your house deposit in less than 90 years.

ELM327

Augeo wrote: »

So what can you do to improve your wages?
Change jobs, upskill etc etc.
Thousands do it.

Agreed. Careful though because people don't like being confronted with reality

TheBoyFromAus wrote: »

He was crucified because he blamed the challenges faced with buying property in Australia purely on frivolous spending. Smashed avo on toast is $10, coffee $2.50-$3. If you go out for breakfast on a saturday or sunday and have a coffee a day that is still only $1,600 a year. The median house price in Aus is around the $700k mark and you need a 20% deposit. If you give up coffee and smashed avo, you can save your house deposit in less than 90 years.

It's about mindset. Not just the avocado and toast but other un-necessary expenditure.
EG instead of pints with the lads at the pub it can be cans with the lads, you know?
I did it for over a year saving my deposit

DebDynamite

TheBoyFromAus wrote: »

He was crucified because he blamed the challenges faced with buying property in Australia purely on frivolous spending. Smashed avo on toast is $10, coffee $2.50-$3. If you go out for breakfast on a saturday or sunday and have a coffee a day that is still only $1,600 a year. The median house price in Aus is around the $700k mark and you need a 20% deposit. If you give up coffee and smashed avo, you can save your house deposit in less than 90 years.

We wouldn't be too familiar with Australian house prices here, but in Dublin you can get a decent enough starter home for under €300,000 if you're not particular about the area (and I'm not even talking about the rougher areas of Dublin), and an apartment even less. The sentiment in what he was saying is probably more applicable to Dublin, in fact

Augeo

Augeo wrote: »

So what can you do to improve your wages?
Change jobs, upskill etc etc.
Thousands do it.

I have done. I went to college, got a degree, worked for years and hit a ceiling in my organisation. I did a masters part time while working, moved jobs and got a pay rise of about 8k. I have worked damn hard and it's still not enough because house prices are completely out of whack with wages.

There are not vast amounts of high paying jobs around the place. Only a portion of people will make it to the top positions, the rest of us are dealing with average wages.

I find it sad that people just accept that this dysfunctional property market is normal and attack anyone who questions why it should be like this. As the title says, it's a ticking time bomb.

TheBoyFromAus

TheBoyFromAus wrote: »

He was crucified because he blamed the challenges faced with buying property in Australia purely on frivolous spending. Smashed avo on toast is $10, coffee $2.50-$3. If you go out for breakfast on a saturday or sunday and have a coffee a day that is still only $1,600 a year. The median house price in Aus is around the $700k mark and you need a 20% deposit. If you give up coffee and smashed avo, you can save your house deposit in less than 90 years.

Absolutely. Careful though, some people don't like being confronted with basic maths.

Flying Fox

Flying Fox wrote: »

I have done. I went to college, got a degree, worked for years and hit a ceiling in my organisation. I did a masters part time while working, moved jobs and got a pay rise of about 8k. I have worked damn hard and it's still not enough because house prices are completely out of whack with wages.

There are not vast amounts of high paying jobs around the place. Only a portion of people will make it to the top positions, the rest of us are dealing with average wages.

I find it sad that people just accept this and attack anyone who questions why it should be like this. As the title says, it's a ticking time bomb.

So you can't afford a house in Dublin. What about moving out a bit or buying an apartment.

You seem to be not early 20s so surely there were opportunities to purchase in 2011 to 2015 before prices started to rise?

Augeo

Augeo wrote: »

So you can't afford a house in Dublin. What about moving out a bit or buying an apartment.

You seem to be not early 20s so surely there were opportunities to purchase in 2011 to 2015 before prices started to rise?

I did try but was refused a mortgage. Banks were cautious coming out of the recession and my salary wasn't great, plus my industry would have been seen as a bit risky (arts related). I had savings but they weren't significant, I built them up more over the last few years. I'm unlucky that just as my earnings started to increase a bit, property prices skyrocketed.

Well I'd imagine you'll have your turn again in the future either by reduced prices or by more deposit / more wages
One needs luck too of course.

tom1ie

The Student wrote: »

If the houses are not built and affordability is an issue then why would a developer build with the uncertainty that prices might fall?

We have a supply issue at the moment, you wont increase supply if there is no profit in the private sector and the Govt are unwilling to increase supply in the social sector as they are trying to get away from supplying social housing. Affordable housing is only a step up from social housing. The question is who pays to make the housing affordable, who makes up the difference between what the market dictates the house is worth and what the purchaser actually pay's.

Public land can be given to developers to build affordable housing but the build costs (leaving aside the land costs) are too high. We insist on high building regulations which drives up costs.

How do we know that? We are depending on the c.i.f to give us building costs and it’s in there interests to say 3 bed semis cant be built for under 200k, which when you add in the economy of scale is complete bull****.

DebDynamite

Flying Fox wrote: »

I did try but was refused a mortgage. Banks were cautious coming out of the recession and my salary wasn't great, plus my industry would have been seen as a bit risky (arts related). I had savings but they weren't significant, I built them up more over the last few years. I'm unlucky that just as my earnings started to increase a bit, property prices skyrocketed.

Hence the reason for people to save during the peaks and then hope to have sufficient savings to buy during the troughs.

I take it you're single? As you're probably not looking for a family home, surely a 2 bed apartment / duplex would be within your budget

Augeo

Augeo wrote: »

Well I'd imagine you'll have your turn again in the future either by reduced prices or by more deposit / more wages
One needs luck too of course.

Thanks, I do hope so but it's a worry at the moment.

TheBoyFromAus

ELM327 wrote: »

Agreed. Careful though because people don't like being confronted with reality

It's about mindset. Not just the avocado and toast but other un-necessary expenditure.
EG instead of pints with the lads at the pub it can be cans with the lads, you know?
I did it for over a year saving my deposit

The median household income for a single is $54k while the median household income is $80k. If you studied at all you will likely have student debt which will be taken out of your earnings, that means before you spend a dollar, your household has $57,000 a year. Not everyone can live with their parents, so you'll likely be spending $400+ a week on rent, electricity $80 p/m, internet $60 p/m, groceries $70 p/w, public transport $60 p/w. Before you've had a coffee or a can with the lads you've spent $30,000 and have had no surprise expenses. Lets say between getting sick, life admin etc you spend $7k. You save $20k a year. After 7 years you have your 120k deposit having foregone coffee and avo toast for 6 years your're ready to buy that $700k one bedroom apartment. Its now worth $900k, guess who needs to save another $40k.

Flying Fox

Flying Fox wrote: »

Thanks, I do hope so but it's a worry at the moment.

I wouldn't worry about it. Folk who buy now might well be worrying about their purchase in a few years.

All you can do is have a savings plan and try to stick to it, build up the deposit wad. In a few years a job opportunity could come along too in a location that appeals that facilitates purchasing somewhere that currently wouldn't suit.

Dublin isnt a huge spot but logistics of getting to and from work does make loads of locations completely unattractive depending where you are working.

TheBoyFromAus

TheBoyFromAus wrote: »

The median household income for a single is $54k while the median household income is $80k. If you studied at all you will likely have student debt which will be taken out of your earnings, that means before you spend a dollar, your household has $57,000 a year. Not everyone can live with their parents, so you'll likely be spending $400+ a week on rent, electricity $80 p/m, internet $60 p/m, groceries $70 p/w, public transport $60 p/w. Before you've had a coffee or a can with the lads you've spent $30,000 and have had no surprise expenses. Lets say between getting sick, life admin etc you spend $7k. You save $20k a year. After 7 years you have your 120k deposit having foregone coffee and avo toast for 6 years your're ready to buy that $700k one bedroom apartment. Its now worth $900k, guess who needs to save another $40k.

We aren't down under.

DebDynamite

TheBoyFromAus wrote: »

The median household income for a single is $54k while the median household income is $80k. If you studied at all you will likely have student debt which will be taken out of your earnings, that means before you spend a dollar, your household has $57,000 a year. Not everyone can live with their parents, so you'll likely be spending $400+ a week on rent, electricity $80 p/m, internet $60 p/m, groceries $70 p/w, public transport $60 p/w. Before you've had a coffee or a can with the lads you've spent $30,000 and have had no surprise expenses. Lets say between getting sick, life admin etc you spend $7k. You save $20k a year. After 7 years you have your 120k deposit having foregone coffee and avo toast for 6 years your're ready to buy that $700k one bedroom apartment. Its now worth $900k, guess who needs to save another $40k.

We're really gone off the subject here talking about house prices and the cost of living in Australia

Arthur Daley

The Student wrote: »

If the houses are not built and affordability is an issue then why would a developer build with the uncertainty that prices might fall?

God help these 'businessmen' might have to face the risk of falling prices or an open market. I mean whatever next.

Houses were below current price levels every year from 2000 to 2004, and these same developers managed to build then. In fact they built too many units.

Are we suggesting seriously that these developers cannot make a decent profit from selling houses at the current 2004 price levels, or even 30% lower (2002/2003 levels)? Many of the rest of us have had our incomes capped off and where told to like it or lump it. Hence the lack of affordability through frozen wages in many sectors.

ELM327

TheBoyFromAus wrote: »

The median household income for a single is $54k while the median household income is $80k. If you studied at all you will likely have student debt which will be taken out of your earnings, that means before you spend a dollar, your household has $57,000 a year. Not everyone can live with their parents, so you'll likely be spending $400+ a week on rent, electricity $80 p/m, internet $60 p/m, groceries $70 p/w, public transport $60 p/w. Before you've had a coffee or a can with the lads you've spent $30,000 and have had no surprise expenses. Lets say between getting sick, life admin etc you spend $7k. You save $20k a year. After 7 years you have your 120k deposit having foregone coffee and avo toast for 6 years your're ready to buy that $700k one bedroom apartment. Its now worth $900k, guess who needs to save another $40k.

We spend Euros here.
If you're spending 30k a year from your net take home pay on just existing, you're doing something wrong.

TheBoyFromAus

ELM327 wrote: »

We spend Euros here.
If you're spending 30k a year from your net take home pay on just existing, you're doing something wrong.

You quoted a guy using the Australian market as a reference. Someone who was a partner at a big 4 accounting firm (likely earning $500k+ a year) and who would have purchased a house when prices were far better aligned to wages. I was simply highlighting how far disconnected he is from todays youth and actual cost of living. I'm not saying Ireland is the same, but theres a reason Dublin is considered the most expensive city in the eurozone for cost of living, its not simply down to young people being frivolous.

The Student

Arthur Daley wrote: »

God help these 'businessmen' might have to face the risk of falling prices or an open market. I mean whatever next.

Houses were below current price levels every year from 2000 to 2004, and these same developers managed to build then. In fact they built too many units.

Are we suggesting seriously that these developers cannot make a decent profit from selling houses at the current 2004 price levels, or even 30% lower (2002/2003 levels)? Many of the rest of us have had our incomes capped off and where told to like it or lump it. Hence the lack of affordability through frozen wages in many sectors.

If we use your theory above regarding prices and profit, why aren't properties being built if there is a risk of falling prices in the future.

Logic would suggest build now before prices fall!

Topgear on Dave

Arthur Daley wrote: »

God help these 'businessmen' might have to face the risk of falling prices or an open market. I mean whatever next.

Houses were below current price levels every year from 2000 to 2004, and these same developers managed to build then. In fact they built too many units.

Are we suggesting seriously that these developers cannot make a decent profit from selling houses at the current 2004 price levels, or even 30% lower (2002/2003 levels)? Many of the rest of us have had our incomes capped off and where told to like it or lump it. Hence the lack of affordability through frozen wages in many sectors.

I live in a house built in 2000.

Its fairly poor quality compared to what is being built now.

Cavity block construction, rubbish insulation, single glazed front door, open fireplace, no rainwater harvesting or solar heating/hotwater

I think the houses getting built now are amazing!

Arthur Daley

The Student wrote: »

If we use your theory above regarding prices and profit, why aren't properties being built if there is a risk of falling prices in the future

To artificially constrict supply, and keep prices elevated

Graham

Arthur Daley wrote: »

Are we suggesting seriously that these developers cannot make a decent profit from selling houses at the current 2004 price levels, or even 30% lower (2002/2003 levels)? Many of the rest of us have had our incomes capped off and where told to like it or lump it. Hence the lack of affordability through frozen wages in many sectors.

Land prices have increased
Building standards have gone up
Financing costs have gone through the ceiling

The Student

Arthur Daley wrote: »

To artificially constrict supply, and keep prices elevated

A single supplier does not have sufficient control in the market to adopt this approach.

If people can't pay as you say then keeping the prices elevated is flawed business model as eventually you will run out of customers!

Arthur Daley

Topgear on Dave wrote: »

I live in a house built in 2000.

Its fairly poor quality compared to what is being built now.

Cavity block construction, rubbish insulation, single glazed front door, open fireplace, no rainwater harvesting or solar heating/hotwater

I think the houses getting built now are amazing!

This is an improvement in the standard of living. If you compare a car in 2000 and one from 2018, you will see many improvements. In some cases the safety is vastly improved. Not many people can deny that this is good.

But the car makers have so much competition and you have enough alternatives that makes the market tight. So they cannot charge you say 50% more for the same car in 2018 that you bought in 2000.

But you will pay maybe 50% more for the same house built in 2018 vs 2000, thanks to the vast property price inflation from 2000-2007, and then again in 2013 to now.

Arthur Daley

The Student wrote: »

If people can't pay as you say then keeping the prices elevated is flawed business model as eventually you will run out of customers!

I couldn't agree more

The Student

Arthur Daley wrote: »

I couldn't agree more

Then the developers will not then build in a falling market so either way prices are not going to fall!

Arthur Daley

The Student wrote: »

Then the developers will not then build in a falling market so either way prices are not going to fall!

Or in some cases your customers vote with their feet and leave. Especially when they are transient in their 20s/early 30s and renting for the rest of their life might be your plan, but they get aspirational and it is not in their plans. Or there is a very substantial political and cultural change for Ireland where people accept they are renting for life, but renters are so fed up that security of tenure etc has to improve.

But then that's why the thread refers to a ticking time bomb I guess.

tom1ie

The Student wrote: »

A single supplier does not have sufficient control in the market to adopt this approach.

If people can't pay as you say then keeping the prices elevated is flawed business model as eventually you will run out of customers!

I know of one builder who is drip feeding houses to the market at a rate of 50 a year from the one site even though he could go ahead and build more houses quicker, but he doesn’t want to saturate the market with houses and constrict house price growth in that area.

Topgear on Dave

tom1ie wrote: »

I know of one builder who is drip feeding houses to the market at a rate of 50 a year from the one site even though he could go ahead and build more houses quicker, but he doesn’t want to saturate the market with houses and constrict house price growth in that area.

I'd totally believe they would try it, what part of the country is it in?

He could also be remembering a few years ago when lots of builders got stuck with unsold houses and got totally f*cked with them.