Increase in population renting... ticking time bomb?

tom1ie

ELM327 wrote: »

That has been the attitude up to now but it's nonsensical really.
I pay interest to cover the fact that my neighbour can stop paying anything with no consequence? Ridiculous.





So who pays.
If the developer has 20 houses and needs to set them at 400k to make a profit margin of 20%
Say then he has to include 5 affordable houses at 250k/
The deficit of (5*150k) needs to be spread amongst the remaining 15 houses.


So instead of 20 400k houses you have 5 250k houses and 15 450k houses. In that scenario, the buyer that buys the normal houses subsidises their neighbor. I don't support that.


Additionally, any land transferred from Nama to the state will move it from off balance sheet to on balance sheet debt and as such reduce our capability to borrow as per EU GDP ratios. Again, it's not as simple as "just giving the nama property to deh council, joe"

I agree it’s nonsensical repossession needs to be in the housing market. Lefties saying it’s unethical don’t understand how the housing market works and the knock on consequences of no repossession.

I’m saying the council should build houses at NO profit. Affordable housing estates for people that actually work. It means people have more disposable income without getting a pay rise which alleviates pressure on employers. They have more disposable income because they “own” less debt, however the banks still earn money off interest from affordable housing mortgages, albeit less interest.

handlemaster

DebDynamite wrote: »

Another thing which hasn’t been mentioned, is I don’t think a lot of young people don’t have the ability to save now. Out of my immediate colleagues, in the small office I work in, myself and another woman are the oldest and every year the younger ones are off on about two holidays per year. You see young ones with the the latest phones, hair extensions, lip fillers, nails always manicured, going out every week, showing their amazing life in Instagram, etc. myself and my colleague always ask where did we go wrong?! Of course, we have mortgages to pay and stuff to buy for the house, etc.

We hear so much now that so many young Dublin people can’t afford to move out, so are living at home with the parents. I’d like to know how many of these even have any savings, and should the house prices go back to near bottom levels, would they have even near a deposit to get a mortgage?

Now, I’m only in my mid 30s, but sacrificed many things to be able to own my own home 4 years ago (with my (ex) partner) and I am by no means a high earner (nor was he) plus we’d both been paying for rent in Dublin since the age of 17.

Can I work in your office sounds like there's lots of external work activities going on !

Topgear on Dave

Telling people that "they should move somewhere that they can afford to live" is unsustainable.

I have little time for some of the sense of entitlement I see from some campaigners on social media but having people move out from urban area leads to urban sprawl, longer commute times, greater need for motorways and cars, poorer public transport and more difficult public service provision.


I also see a thread asking what Virginia county Cavan is like to live in, and commute to Dublin, this is precisely where we were 11/12 years ago before the bust.

The boom is back baby :rolleyes: (I feel so old now)

ELM327

Topgear on Dave wrote: »

Telling people that "they should move somewhere that they can afford to live" is unsustainable.

I have little time for some of the sense of entitlement I see from some campaigners on social media but having people move out from urban area leads to urban sprawl, longer commute times, greater need for motorways and cars, poorer public transport and more difficult public service provision.


I also see a thread asking what Virginia county Cavan is like to live in, and commute to Dublin, this is precisely where we were 11/12 years ago before the bust.

The boom is back baby :rolleyes: (I feel so old now)

If housing in Dublin costs X and you earn less than 3.5 times X, and/or cannot pay the monthly repayments on X, you cannot afford it.
And you probably cannot afford the rent either as if the mortgage costs on X are Y per month, then the rent is often 1.2Y or more per month


So you either earn more or pay less. And the way to pay less is to move.
Simples.

FishOnABike

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.

And that's the problem. It should not rely on luck for a significant portion of the population to be able to afford one if the most basic necessities. It it does it is a significant societal and economic structural problem.

FishOnABike

FishOnABike wrote: »

And that's the problem. It should not rely on luck for a significant portion of the population to be able to afford one if the most basic necessities. It it does it is a significant societal and economic structural problem.

Well they have a roof over their head currently as they are renting so they have the basic necessity sorted.
Owning your own property isn't a basic necessity.

ELM327

FishOnABike wrote: »

And that's the problem. It should not rely on luck for a significant portion of the population to be able to afford one if the most basic necessities. It it does it is a significant societal and economic structural problem.

Accomodation/Shelter is a necessity


Ownership of an asset, or alternatively the ability to pay cheap rent to live in a posh/expensive/in demand area are two commodities that are most certainly not essential


If you can't afford to live somewhere, then move. Simple.
There's no point opining after a swanky 6 bed in leafy D4 if you work for minimum wage and are not taking steps to further your career.
You may as well move to somewhere more affordable.

FishOnABike

The Student wrote: »

Well then people must therefore live with the consequences of their actions. As the old saying goes "a fool and his money are easily parted" so if people take on debts having seen what happened in the past then they must live with the outcome.

if they don't think they are getting value for money then don't buy!

The catch 22 is that a lot of people cannot afford to buy, because of a combination of high house prices relative to income and high rental costs which impact their ability to raise a large enough deposit. For them there is no choice.

They are locked into paying high rents (often higher than a mortgage repayment would be) with no realistic prospect of being able to buy. When they retire they will still be paying high rents but will not have the income to pay. That's the ticking time bomb.

Politicians will do nothing because the problem is more than five years away so it is someone else's problem.

The Student

FishOnABike wrote: »

The catch 22 is that a lot of people cannot afford to buy, because of a combination of high house prices relative to income and high rental costs which impact their ability to raise a large enough deposit. For them there is no choice.

They are locked into paying high rents (often higher than a mortgage repayment would be) with no realistic prospect of being able to buy. When they retire they will still be paying high rents but will not have the income to pay. That's the ticking time bomb.

Politicians will do nothing because the problem is more than five years away so it is someone else's problem.

People can afford to buy. Once you have your deposit you can buy. Stay at home, save for your deposit. You would be surprised how little you need to save on a weekly basis to get a deposit together. If you start saving an average of €40 a week from the age of 18 after 8 yrs you have over 18k multiply this by 2 people and you have a deposit of €36k.

An average of €40 a week is not much, obviously at 18 & 19 yrs old its a lot but not at 23yrs old, 24yrs old etc.

The number of people who say they can't afford to buy yet go on foreign holidays each year, have designer clothes, expensive mobile phones, TV packages never ceases to amaze me.

Life is all about sacrifices to get what you want.

ELM327

The Student wrote: »

People can afford to buy. Once you have your deposit you can buy. Stay at home, save for your deposit. You would be surprised how little you need to save on a weekly basis to get a deposit together. If you start saving an average of €40 a week from the age of 18 after 8 yrs you have over 18k multiply this by 2 people and you have a deposit of €36k.

An average of €40 a week is not much, obviously at 18 & 19 yrs old its a lot but not at 23yrs old, 24yrs old etc.

The number of people who say they can't afford to buy yet go on foreign holidays each year, have designer clothes, expensive mobile phones, TV packages never ceases to amaze me.

Completely agree

The Student wrote: »

Life is all about sacrifices to get what you want.

I'd phrase it more as life being about better fiscal management. Your wages and income are a finite resource.

Arthur Daley

Augeo wrote: »

Well they have a roof over their head currently as they are renting so they have the basic necessity sorted.
Owning your own property isn't a basic necessity.

Moving on from a basic necessity in a so called developed western European nation, comes things like security of tenure, and the ability to put down some roots (to a reasonable degree), make some plans, provide some continuity especially for dependants like the young and the old. These are quality of life issues beyond the basic need, but people view them as indicators of the true economic well being of a nation.

Ireland in the last 20 years is quite a big failure in this regard, irrespective of what the political classes complacently believe.

Rampaging rents, and a system that is actively gamed by both cute hoor landlords and tenants (there are two of them at it) are not helping to improve the lot of people.

tom1ie

The Student wrote: »

People can afford to buy. Once you have your deposit you can buy. Stay at home, save for your deposit. You would be surprised how little you need to save on a weekly basis to get a deposit together. If you start saving an average of €40 a week from the age of 18 after 8 yrs you have over 18k multiply this by 2 people and you have a deposit of €36k.

An average of €40 a week is not much, obviously at 18 & 19 yrs old its a lot but not at 23yrs old, 24yrs old etc.

The number of people who say they can't afford to buy yet go on foreign holidays each year, have designer clothes, expensive mobile phones, TV packages never ceases to amaze me.

Life is all about sacrifices to get what you want.

Yes life is all about sacrifices and people should be able to save a deposit instead of going on holidays etc, I totally agree.
However why put people in so much debt, when people would have more disposable income with a smaller mortgage and banks would still make profits?

GingerLily

Topgear on Dave wrote: »

Telling people that "they should move somewhere that they can afford to live" is unsustainable.

I have little time for some of the sense of entitlement I see from some campaigners on social media but having people move out from urban area leads to urban sprawl, longer commute times, greater need for motorways and cars, poorer public transport and more difficult public service provision.


I also see a thread asking what Virginia county Cavan is like to live in, and commute to Dublin, this is precisely where we were 11/12 years ago before the bust.

The boom is back baby :rolleyes: (I feel so old now)

That thread was from a non native - I think they underestimate the traffic

FishOnABike

Augeo wrote: »

Well they have a roof over their head currently as they are renting so they have the basic necessity sorted.
Owning your own property isn't a basic necessity.

ELM327 wrote: »

Accomodation/Shelter is a necessity


Ownership of an asset, or alternatively the ability to pay cheap rent to live in a posh/expensive/in demand area are two commodities that are most certainly not essential


If you can't afford to live somewhere, then move. Simple.
There's no point opining after a swanky 6 bed in leafy D4 if you work for minimum wage and are not taking steps to further your career.
You may as well move to somewhere more affordable.

We're not talking about the affordability of exclusive properties in the most sought after locations in the country. When the average person cannot afford the average house then there is a significant problem. This is the issue.

Those people, a sizeable number and increasing, will be locked into long term renting. Rents will increase at (or as currently) above the rate of inflation and when they retire will still be renting and, due to reduced income in retirement, require some form of rent support.

My mortgage repayments haven't varied significantly since I first took out the loan. Due to inflation (unless I voluntarily overpay) my repayments have decreased in real terms. If everything works out by the time I retire I should own my house outright, have no ongoing repayments and have been able to put some of the savings from the lower mortgage v renting payments into my pension, thereby increasing my retirement income.

If something is not done this polarisation of society is something that will increase over the next thirty to forty years. This is the ticking time bomb. Unfortunately I can't see our politicians doing anything about it as they never appear to be able to think beyond the next five years and the next election.

ELM327

FishOnABike wrote: »

We're not talking about the affordability of exclusive properties in the most sought after locations in the country. When the average person cannot afford the average house then there is a significant problem. This is the issue.

Those people, a sizeable number and increasing, will be locked into long term renting. Rents will increase at (or as currently) above the rate of inflation and when they retire will still be renting and, due to reduced income in retirement, require some form of rent support.

My mortgage repayments haven't varied significantly since I first took out the loan. Due to inflation (unless I voluntarily overpay) my repayments have decreased in real terms. If everything works out by the time I retire I should own my house outright, have no ongoing repayments and have been able to put some of the savings from the lower mortgage v renting payments into my pension, thereby increasing my retirement income.

If something is not done this polarisation of society is something that will increase over the next thirty to forty years. This is the ticking time bomb. Unfortunately I can't see our politicians doing anything about it as they never appear to be able to think beyond the next five years and the next election.

The average house in the country as a whole is not a 3 bed semi within walking distance of OConnell street or the luas though.


The average house is probably closer to Portlaoise than Dublin.

FishOnABike

Even before they retire, people locked into ever increasing rents will have less disposable income in an ongoing basis. This will also stifle the economy.

FishOnABike

ELM327 wrote: »

If housing in Dublin costs X and you earn less than 3.5 times X, and/or cannot pay the monthly repayments on X, you cannot afford it.
And you probably cannot afford the rent either as if the mortgage costs on X are Y per month, then the rent is often 1.2Y or more per month


So you either earn more or pay less. And the way to pay less is to move.
Simples.

And who do you think is going to work in the shop you shop in, serve you your latte, deli / café / restaurant you eat in ?

We can't just fill our large urban centres with high earning finance / IT / pharma / etc. , workers and bus in minimum wage drones from Roscommon to serve them. Cities need a functional mix of people to work.

If our social planning does not address that need for a functional mix then we are lighting the fuse to a time bomb.

ELM327

FishOnABike wrote: »

And who do you think is going to work in the shop you shop in, serve you your latte, deli / café / restaurant you eat in ?

We can't just fill our large urban centres with high earning finance / IT / pharma / etc. , workers and bus in minimum wage drones from Roscommon to serve them. Cities need a functional mix of people to work.

If our social planning does not address that need for a functional mix then we are lighting the fuse to a time bomb.

The market will correct itself.
Some people can live with parents for free and work min wage
Students can work part time.


It's not as black and white as you make it.
I would contend that no one should be employed in a starbucks as a barista and be able to rent or buy in the city centre. It doesn't happen in other cities so why here?


FYI - I do not work in Dublin. I live in Meath and commute in every day to work. Because my partner and I could not get approval for the funds needed to buy the property we wanted in Dublin. So .. guess what.. we are working at promotions and making ourselves worth more to our field and then will buy in 3 years in Dublin when we will get approved for a higher amount as our salaries will have increased.

I'm not sitting in my penthouse in the IFSC telling everyone else what to do... I'm actively practising what I preach!

FishOnABike

FishOnABike wrote: »

We're not talking about the affordability of exclusive properties in the most sought after locations in the country. When the average person cannot afford the average house then there is a significant problem. This is the issue................

I live in an apartment. It's fantastic.
I work in Dublin, my apartment isn't in Dublin, still all good.

You wont' see me b1tching and moaning that I can't afford an "average" house in Dublin.

FishOnABike

FishOnABike wrote: »

And who do you think is going to work in the shop you shop in, serve you your latte, deli / café / restaurant you eat in ? ..............

Where do all those folk live currently?

The Student

tom1ie wrote: »

Yes life is all about sacrifices and people should be able to save a deposit instead of going on holidays etc, I totally agree.
However why put people in so much debt, when people would have more disposable income with a smaller mortgage and banks would still make profits?

In a normal functioning market banks would compete with each other for mortgage customers etc. However we don't have a normal functioning market for a number of reasons

1. Inability to repossess properties when mortgages not being paid
2. HAP & RAS payments putting a floor on rents and driving them up
3. No investment opportunities other than property at the moment
4. State involvement in the private rented sector with increasing regulations and increased taxes.
5. Almost impossible evictions of tenants.

A healthy market would exist if there was some element of certainty and some element of fairness to all concerned. As it stands Landlords wont improve accommodation as they don't get a sufficient return on investment.

Some Landlords purchased properties specifically to give their children a start in life when that comes around. Now we have suggestions that landlords can't let their children move into the property. People seem to forget the property is the landlords to do with what he wants. If he enters into a contract for a set period of time and honors that contract then that should be the end of it.

Supply is needed there is no doubt but with that we need to improve enforcement of non paying tenants and rogue landlords.

Until we address the fundamentals above why would anybody invest or any bank enter the market to have real competition.

Arthur Daley

The Student wrote: »

Until we address the fundamentals above why would anybody invest or any bank enter the market to have real competition.

And the Banks aren't lending. Not in any meaningful way. New entrants won't touch this market either.

A red hot property market but little new lending. Not that we want it getting out of control either, but there is a balance there in a healthy, functioning market.

The Mortgages issued by the Banks now are being funded by repayments on existing Mortgages. For the reasons that you outlined.

ELM327

Arthur Daley wrote: »

And the Banks aren't lending. Not in any meaningful way. New entrants won't touch this market either.

A red hot property market but little new lending. Not that we want it getting out of control either, but there is a balance there in a healthy, functioning market.

The Mortgages issued by the Banks now are being funded by repayments on existing Mortgages. For the reasons that you outlined.

As a new homeowner since Q1 this year, I would disagree.

Arthur Daley

ELM327 wrote: »

As a new homeowner since Q1 this year, I would disagree.

I would contend that one or two people getting a Mortgage is not proof of vast amounts of new lending. Over and above the Bank getting repayments in, and lending these back out.

ELM327

Arthur Daley wrote: »

I would contend that one or two people getting a Mortgage is not proof of vast amounts of new lending. Over and above the Bank getting repayments in, and lending these back out.

https://www.bpfi.ie/publications/bpfi-mortgage-drawdowns/


Increase of 13.5% in volume and 22.4% in value compared Q1 2018 to Q1 2017

That's an increase of a fifth in terms of money out on loan, on a QoQ basis.


https://www.bpfi.ie/publications/bpfi-mortgage-drawdowns/

Arthur Daley

ELM327 wrote: »

https://www.bpfi.ie/publications/bpfi-mortgage-drawdowns/


Increase of 13.5% in volume and 22.4% in value compared Q1 2018 to Q1 2017

That's an increase of a fifth in terms of money out on loan, on a QoQ basis.


https://www.bpfi.ie/publications/bpfi-mortgage-drawdowns/

Off a low base though isn't it. To compare year and year stats from the Banking lobby. New Lending hasn't been there in a meaningful way since 2009. Especially now with the elevated prices.

ELM327

Arthur Daley wrote: »

Off a low base though isn't it. To compare year and year stats from the Banking lobby. New Lending hasn't been there in a meaningful way since 2009. Especially now with the elevated prices.

Approx €1.2 billion in Q1 2016 to €1.4 billion in Q1 2017 to €1.7 billion Q 2018


I'd love to see the figures for 2006,2007,2008 for context

Arthur Daley

ELM327 wrote: »

Approx €1.2 billion in Q1 2016 to €1.4 billion in Q1 2017 to €1.7 billion Q 2018


I'd love to see the figures for 2006,2007,2008 for context

The Central Bank May 2018 stats say:

Loans to households, adjusted for loan sales and
securitisations, declined by 1.6 per cent in annual terms to end-May.

2
Mortgage loans, which account for 83 per cent of total
on-balance sheet loans, decreased by €49 million in May
(Chart 1). In year-on-year terms, net mortgage lending
rose by €295 million or 0.4 per cent, a marginal increase
on the previous month.

Table 1.2 that is linked in this document shows a spreadsheet which shows that Loans to Households for House Purchase is now at €73.8bn. This has been falling steadily since 2008. Even in 2013 this was up around €84bn.

This may not include every Mortgage in the country, but this will have all the main Mortgage providers. We haven't heard of material new entrants to the market. This is evidence that according to the Central Bank, in the overall scheme of things the Banks have been, and continue to shrink their Mortgage books.
https://www.centralbank.ie/docs/default-source/statistics/data-and-analysis/credit-and-banking-statistics/bank-balance-sheets/money-and-banking-statistics-may-2018.pdf?sfvrsn=4

If we were to look at 2008 €127bn and compare it to 2018 €74bn, then we could assume that if Ireland continued to pay back it's Mortgages at the rate it has in the last decade, the entire category here would be zero and Mortgage free by 2038 at the latest (crazy for sure). That does not suggest to me that much new lending is really going on, despite what the lobbies may say year on year.

The Student

The Student wrote: »

.....................
[*]No investment opportunities other than property at the moment...............

That's a ludicrous statement.
Incremental, steady investment in the stock market is always an option. And for folk claiming that stocks are overvalued now I don't think that property offers better value. Also, many "investors" in property are borrowing to invest which is a fairly dim concept if you think about it.

The Student

Augeo wrote: »

That's a ludicrous statement.
Incremental, steady investment in the stock market is always an option. And for folk claiming that stocks are overvalued now I don't think that property offers better value. Also, many "investors" in property are borrowing to invest which is a fairly dim concept if you think about it.

Property offers better value if you are looking for a particular area. If you are looking for a particular area and no property becomes available at the point you need/want it at then what do you do?

You are correct incremental investment in the Stock Market is an option with a property investment I decide what I do with my investment and what decisions I want to make with it.

With Stocks and Shares as I am sure you are aware it is the majority/institutional investors who ultimately decide the direction of the company the shares are invested in not a small holding investor of which I would be classed.

If you feel stocks and shares are a good option then invest in them, I don't and as such don't want to invest in them. Each to their own strategy, it may work for you and not for me, it may work for me and not for you, it may work for both of us or neither of us. That's the risk we take as investors.