Confused

cordy1969

Hello,

Sorry if this has been covered previously. Being a new resident to the country, I am slightly confused by your housing market. Ill try and explain:

Average House price Ireland: 229000
Deposit required: 10% 22900
Mortgage: 3.5 times your annual salary
Average Wage: 45000
Tax 20% up to 43550 and then 40%

Obviously on those figures its very hard to buy a house.

My question is why does the Central Bank place 3.5 times your annual salary as a cap? This seems out of sync with other countries I have lived in.

Peregrinus

Because the want to avoid a repeat of the pre-2008 housing bubble. They are concerned that if people's borrowings are larger, relative to their earnings, and if interest rates (and therefore repayments) go up, large numbers of people will default on their homeloans.

PaulKK

You won't find many single income households buying a house. Double the 45k to 90k and see why it's possible to have the average you mentioned.

Allowing people to borrow more is not the answer. All that allows is for people to borrow more than they can afford.

Peregrinus

PaulKK wrote: »

You won't find many single income households buying a house . . .

And certainly not buying a house at the average price. The average buyer is going to be a couple, not a single person.

Plus, the average housebuying couple is on above-average earnings, because people at the lowest end of the earnings range aren't in the house-buying market. Most people need to progress a bit in their careers, earnings-wise, before they can think of buying a house.

Irish Raven

Peregrinus wrote:

Plus, the average housebuying couple is on above-average earnings, because people at the lowest end of the earnings range aren't in the house-buying market. Most people need to progress a bit in their careers, earnings-wise, before they can think of buying a house.

I get, and dont get what your saying...so unless you progress in a career or job, you shouldnt be in the market for a house....seems a tad unfair...

Peregrinus

Irish Raven wrote: »

I get, and dont get what your saying...so unless you progress in a career or job, you shouldnt be in the market for a house....seems a tad unfair...

No. I'm not saying you shouldn't be in the market for a house. I'm just observing that you're probably not.

Remember, the average wage is the average across everybody, from the unqualified school-leaver stacking supermarket shelves in the summer before he goes to college right through to the chief executive. But, while the chief executive may be thinking of upgrading to a home still more luxurious than the one he already has, the shelf-stacker is probably not looking to buy a house just yet.

So, if you take out of the equation all the people who are in employment but are not (yet) looking to buy a house and just look at the average earnings of prospective housebuyers, that average is going to be higher than 45k. And, in terms of measuring housing affordability, that's probably a more relevant figure.

riclad

do you Want to buy a house,or somewhere to live.
229K is average for a 3 bed house.
You can buy a 1 bed apartment or even a 1 bed house.
prices vary from area to area , town ,city , county.
Look on daft.ie ,search county where you intend to live.
The 3.5 time salary rule is to stop the banks lending too much,
in 2005 you could borrow 10 times your wage ,
result when the crash happened in 2008,
the government had to borrow to rescue the banks from going bust .
Many people buy a house for 140k and commute to work .
The rules help keep house prices stable ,
and stop banks from lending recklessly .
The banks have shown they have no self control or common sense ,
read up on celtic tiger housing crash ireland.
We will be paying for the crash and rescue of the banks
for the next 10-20 years .Theres lots of jobs going in ireland , thats positive, the negative is high rents and house prices , for any person who choose,s to work here .


https://www.daft.ie/cork-city/property-for-sale/?ad_type=sale&advanced=1&s%5Bmxp%5D=150000&s%5Badvanced%5D=1&searchSource=sale


https://www.daft.ie/cork/houses-for-sale/blackpool/1-mahony-square-great-william-obrien-street-blackpool-cork-1907687/

125k for a house ,thats lower than the average 229k. for a house in a city area.

fatbhoy

I doubt that the average yearly gross wage wage of those seeking a mortgage (< 45 years of age) is 45K. I'd say it's lower.

Twenty Grand

Irish Raven wrote: »

I get, and dont get what your saying...so unless you progress in a career or job, you shouldnt be in the market for a house....seems a tad unfair...

That's why so many are on housing lists and so many are stuck renting with no hope of saving.

Also bear in mind the average house price is above what most first time buyers are looking at.

Peregrinus

fatbhoy wrote: »

I doubt that the average yearly gross wage wage of those seeking a mortgage (< 45 years of age) is 45K. I'd say it's lower.

What makes you think everyone seeking a mortgage is under 45? Lots of people over that age trade up to larger houses, and need mortgage finance to do so.

I agree that almost everyone seeking a first mortgage is likely to be under 45. But for that group of people the relevant comparator is not the average house price; it's the average price of starter homes, as sold to first-time buyers.

Amirani

fatbhoy wrote: »

I doubt that the average yearly gross wage wage of those seeking a mortgage (< 45 years of age) is 45K. I'd say it's lower.

Perhaps. But comparing average wage to average house prices is silly, when the average house price is clearly more tied to 2 contributing wages, with couples heavily influencing it.

The average salary contributing to the average house is definitely above that figure. A better analysis would be trying to identify a subset of properties that are suitable for single people; studios and certain 1 beds, and comparing these to average wage of 1 person.

koheim

fatbhoy wrote: »

I doubt that the average yearly gross wage wage of those seeking a mortgage (< 45 years of age) is 45K. I'd say it's lower.

"Average annual earnings for full-time employees in 2017 were €46,402"
(and you kind of need to be a full time employee to get a morgage)
[font=Roboto Sans, sans-serif]https://www.cso.ie/en/releasesandpublications/er/elca/earningsandlabourcostsannualdata2017/[/font]

Amirani

koheim wrote: »

"Average annual earnings for full-time employees in 2017 were €46,402"
(and you kind of need to be a full time employee to get a morgage)
[font=Roboto Sans, sans-serif]https://www.cso.ie/en/releasesandpublications/er/elca/earningsandlabourcostsannualdata2017/[/font]

Yeah, but only a certain segment of full time employees are seeking a mortgage. People on 300k+ for example are unlikely to be seeing a mortgage, either are people who have bought a house recently or those who have adult children.

Peregrinus

Amirani wrote: »

Yeah, but only a certain segment of full time employees are seeking a mortgage. People on 300k+ for example are unlikely to be seeing a mortgage, either are people who have bought a house recently or those who have adult children.

People on 300k+ may well be seeking a mortgage, if e.g. they wish to invest in residential property for letting. Or because as a result of relationship breakdown they want to establish a separate home. Or they want to buy a dwelling in a university time for their pampered, over-indulged college-age offspring. Or for a variety of other reasons. People who bought a house recently may be seeking a mortgage because they want to trade up to accommodate a growing family.

Amirani

Peregrinus wrote: »

People on 300k+ may well be seeking a mortgage, if e.g. they wish to invest in residential property for letting. Or because as a result of relationship breakdown they want to establish a separate home. Or they want to buy a dwelling in a university time for their pampered, over-indulged college-age offspring. Or for a variety of other reasons. People who bought a house recently may be seeking a mortgage because they want to trade up to accommodate a growing family.

I said "unlikely", not that they wouldn't. Maybe I should've just said less likely.

Peregrinus

Amirani wrote: »

I said "unlikely", not that they wouldn't. Maybe I should've just said less likely.

I don't know that they are less likely. As others have pointed out, the average house price seems to be well in excess what the average earner could afford, given deposit requirements and mortgage limitations. And since the average house price is calculated on what price houses are actually sold at in the real world, it seems clear that the buyer of the average house earns considerably more, or has access to more capital, than the average earner. Which suggests that this sector is a pretty large chunk of the housebuying market.

riclad

The average wage is 30k, in most area,s outside dublin you can buy a 3 bed semi d for 150-170k.
They get the average by adding up ALL houses sold in ireland,
so this includes houses sold in dublin 4 ,ballsbridge etc for 2-4 million euros.
So this might push up the average house .