Property Market 2020

combat14

Minister for Finance Paschal Donohoe has said the Covid-19 support payments would likely be “tapered” and “changed” when the 12 week period is up.

He is hoping to maintain social welfare payments and public service pay economic circumstances permitting ..

looks like a whole heap of pay cuts and tax rises (let alone green taxes) in the pipeline again

house prices hardly keep going up after all this?

GreeBo

ittakestwo wrote: »

But Europe is facing what Japan have been going through for years.They have been the only developed country to have faced this deflationary cycle so using them as a predictor of what might happen in Europe that is now staring down this path might be a good indicator of what is to come.

The characteristics which starts this deflationary cycle is, Low real growth rates (probably due to competition from emerging markets) Already low/no inflation and interest rates and an aging/falling population. That where Europe is going now

No other developed country has had this apart from Japan and look at how property prices are 40% lower today than in 1990 when the country peaked. What do you think the future will be for Europe?

I dont know how you can equate Europe to Japan in the 70s-80s...what do you think caused the boom in Japan and where do you see that happening in Europe?

FVP3

GreeBo wrote: »

So now only a tiny percentage of the population can buy a house....how does that help exactly?

The same number of people will be able to buy houses as houses would be cheaper. The opposite of what happens if you increase the length of the mortgage.

(The only possible problem is builders not building at lower prices )

Hubertj

Japan? 50% mortgages? I'm very very confused!!!

JimmyVik

fliball123 wrote: »

Well the problem is there where would you put it, it actually costs money now to leave it in a bank, is it a bit risky to put it under the mattress, stocks and shares are more volatile than property ...At least in property you have the choice of someone else paying your mortgage, remember 100% of mortgage interest can be written off.

I have places I put my money. Not in buy to let though.

FVP3

fliball123 wrote: »

OK you realise we can already get a 35 year mortgage here so its not that far off that,

Irrelvant. 50 years is worse and more inflationary.

You also forget the longer you have a property the likelihood is that in 50 years time that property will be worth a lot more. Can you name me one location on earth where prices are cheaper than 50 years ago so that equity that the person has built up can either be used for retirement home or the kids can take over the mortgage and parents can live their lives out rent free, it would of course be there choice but remember in 50 years time all property all over the world will be more expensive than it is today

I didn't forget that at all. I literally mentioned it when I said equity butters no parsnips i.e. it isn't income. The equity in the house will increase regardless of whether the mortgage is 50 or 30 years. The difference is that theres 20 more years to pay in the 50 year mortgage.

so what would you do accept the gift that your parents have given you as in they paid a large percentage of your mortgage for you and pay the rest and you have your house paid for or say no thanks dad, I will buy my own very expensive house?

Kids do inherit properties and would you not rather have a property with some mortgage paid off it or you save and pay for your own place?

in the 30 year scenario the house is paid off when inherited or handed over, in the 50 year scenario it isn't, clearly for the kids the former is better. They may not want to, or cannot, live in the house anyway.

Remember when someone is 80 and say they have paid the mortgage there are still bills coming in to be paid and most likely your going to have some type of illness that needs to be covered. When I am 80 I would love to have had a long number of years where I wasn't paying more on my mortgage so I could actually enjoy life in the hear and now, have my son take over the mortgage when I retire knowing I can stay in the house till I pop my clogs and also know that I have paid a large chunk of my sons house off. Now this would get dicey when there is more than one sibling but no doubt there would be ways and means to compensate.

Honestly black is white with your argument. Your scenario would mean that an 80 year old would possibly be paying back his mortgage unless the children took it over, and they don't benefit either because to benefit they have to live in that house and if they do that they would be paying a mortgage they wouldn't be paying if it were a 30 year mortgage because it would be paid off.

In the present 30 year scenario you don't pay after you retire ( you cant get a mortgage to extend past retirement age, except in rare circumstances).

The only beneficiaries are the banks.

I am only floating it as an option that seems to have worked over in Asia

An I am pointing out the flaws.

FVP3

The 50 year mortgages actually were from the Japanese boom.

https://www.quora.com/Do-Japanese-banks-still-offer-100-year-mortgages-to-purchase-a-home

Villa05

fliball123 wrote:

A population that is increasing and with availability of land decreasing.

We have sufficient land to deal with a tripling population

Assetbacked

Worth re-mentioning Brexit and the likelihood of a further extension, with the wait for a fallout from the whole affair feeling like we're waiting for Godot at this stage. Brexit was cited as a probably incorrect reason for the price growth slowdown last year at the expense of focusing on affordability issues so I wouldn't be surprised to see it used as another shield to deflect from property market woes caused by affordability issues once the covid19 crisis subsides.

There was an article in the Business Post at the weekend and I didn't see the topic reported elsewhere. https://www.businesspost.ie/ireland/farmers-and-developers-line-up-to-oppose-land-price-cap-plan-27a9b5c9

Some quotes;

Fianna Fáil and Fine Gael have promised to hold a referendum on the move to address the housing crisis if they are able to form a new government.

The two parties have privately agreed to hold a vote on giving the state the power to cap the price of land, although the level of the cap has not yet been decided. The Land Development Agency and councils would be given the power to acquire housing land at these capped prices using compulsory purchase orders.

Given the power of the forces opposed to a land price cap, it is little wonder that no previous government ever tried to implement the original recommendation ofJudge John Kenny. He was the one who came up with the concept of capping land prices to make housing more affordable in his 1973 report.

He recommended that landowners should get a maximum premium of 25 per cent on the price of undeveloped land which is needed for housing. This would strip away the potential for high profits which currently can be made when former agricultural or industrial land is rezoned for housing.

The IFA has already advanced one argument which it will be deploying if necessary in a referendum campaign. Cullinan said that it would not allow the housing problem to be used to diminish the property rights of farmers, as there are almost 2,000 hectares of land under state ownership which could address that issue.

It is true that the state does own all this land in very good locations in the major cities, which could be used for housing. But if it provides the land at cut-price rates so that affordable housing can be built on it, there is a risk that developers could take a case under EU state aid rules, arguing that the state was engaging in unfair competition.

A constitutional referendum to cap the price of land might allow the state to make its own land available cheaply to councils, the Land Development Agency and even private developers operating under state licence. And of course, it would affect all privately owned land as well.

But the counter argument will be that getting the existing agricultural value of the land, plus a 25 per cent premium, is hardly the dawn of a police state. And the high cost of land is a key factor in the high cost of housing here. Taking action to reduce it is something that could command significant public support, at a time when 10,000 people are in emergency accommodation and the notion of owning your own home is becoming a distant dream for many people.

Developers might find it difficult to win public sympathy, just as judges struggled when a referendum to allow their salaries to be cut during the recession was passed by a landslide. The best hope for developers and farmers would be to tap into a deeper fear about giving the state “too much power”. That worked for those who succeeded in preventing the abolition of the Seanad in the 2011 referendum.

fliball123

Villa05 wrote: »

We have sufficient land to deal with a tripling population

Good luck with building in the back arse of Leitrim so see how many ghost estates you can put up

TSQ

FVP3 wrote: »

Irrelvant. 50 years is worse and more inflationary.

I didn't forget that at all. I literally mentioned it when I said equity butters no parsnips i.e. it isn't income. The equity in the house will increase regardless of whether the mortgage is 50 or 30 years. The difference is that theres 20 more years to pay in the 50 year mortgage.

in the 30 year scenario the house is paid off when inherited or handed over, in the 50 year scenario it isn't, clearly for the kids the former is better. They may not want to, or cannot, live in the house anyway.

Honestly black is white with your argument. Your scenario would mean that an 80 year old would possibly be paying back his mortgage unless the children took it over, and they don't benefit either because to benefit they have to live in that house and if they do that they would be paying a mortgage they wouldn't be paying if it were a 30 year mortgage because it would be paid off.

In the present 30 year scenario you don't pay after you retire ( you cant get a mortgage to extend past retirement age, except in rare circumstances).

The only beneficiaries are the banks.
An I am pointing out the flaws.

My friend in Toronto moved house in her 50’s with a 30 year mortgage. She had a big deposit, maybe as much as 60%, from selling her old house, but still has hefty repayments as she bought bigger and in a better neighbourhood. Another friend in San Francisco bought her first house in her late 40’s on what appears to be a rolling 30 year mortgage, which means she can keep extending the term each time she remortgages (and I will admit, I am not sure how this works...I think you just keep going till the principal is paid off). She has also been able to remortgage to take advantage of better interest rates. Both friends are currently or will be paying off the mortgage well into their retirement. They would rather be mortgage free, who wouldn't, but have the security of substantial equity built up and the option to downsize if the repayments get too difficult on retirement income. Also, in SF and Toronto rents in the past 10 years have skyrocketed. They are paying less than if they had to rent, and have security of tenure. If they die before the mortgage is paid off, the bank has first claim on the proceeds of a sale. As for leaving a house to the kids, ff’s sake.
Here, in contrast, if you dont have cash and dont manage to buy a home, or if you want to upgrade, by your late 40’s or 50’s your are screwed, no matter if you have a big deposit. In other areas of business this would be called age discrimination.

JimmyVik

GreeBo wrote: »

I didnt say "we all", but just because you dont, doesnt mean that a lot of other people dont.
Take a look at the amount of household money on deposit in Ireland, its around €100Bn, even if you take our the very wealthy, there is still a huge amount of cash waiting to be invested.

And they were all queuing up for BTL before this were they?

TSQ

Assetbacked wrote: »

Worth re-mentioning Brexit and the likelihood of a further extension, with the wait for a fallout from the whole affair feeling like we're waiting for Godot at this stage. Brexit was cited as a probably incorrect reason for the price growth slowdown last year at the expense of focusing on affordability issues so I wouldn't be surprised to see it used as another shield to deflect from property market woes caused by affordability issues once the covid19 crisis subsides.

There was an article in the Business Post at the weekend and I didn't see the topic reported elsewhere. https://www.businesspost.ie/ireland/farmers-and-developers-line-up-to-oppose-land-price-cap-plan-27a9b5c9

Some quotes;

Surely this issue could be dealt with easily and quickly via taxation legislation, by slapping a 100% CGT liability on rezoned land, based on the increase in value attributed to rezoning. Tax could be paid immediately at current land values or deferred till sale, based on the actual sale price.

Hubertj

Assetbacked wrote: »

Worth re-mentioning Brexit and the likelihood of a further extension, with the wait for a fallout from the whole affair feeling like we're waiting for Godot at this stage. Brexit was cited as a probably incorrect reason for the price growth slowdown last year at the expense of focusing on affordability issues so I wouldn't be surprised to see it used as another shield to deflect from property market woes caused by affordability issues once the covid19 crisis subsides.

There was an article in the Business Post at the weekend and I didn't see the topic reported elsewhere. https://www.businesspost.ie/ireland/farmers-and-developers-line-up-to-oppose-land-price-cap-plan-27a9b5c9

Some quotes;

this was discussed a few pages back, or possibly on another thread. I would like to see how it is operationalized - it could be like turkeys voting for xmas. What happens to people who have purchased houses at X prices where price of land accounts for significant %. Home owners are asked to vote for a referendum that could essentially put them in negative equity......? How do you sell that to the general public even though the intent is for the good of the country?
I think it is a good idea and needs to be done considering the crazy prices paid in some instances. How to sell it to the public is another challenge...

awec

Hubertj wrote: »

this was discussed a few pages back, or possibly on another thread. I would like to see how it is operationalized - it could be like turkeys voting for xmas. What happens to people who have purchased houses at X prices where price of land accounts for significant %. Home owners are asked to vote for a referendum that could essentially put them in negative equity......? How do you sell that to the general public even though the intent is for the good of the country?
I think it is a good idea and needs to be done considering the crazy prices paid in some instances. How to sell it to the public is another challenge...

I don't think it would have much, if any impact on homeowners of existing properties if land prices were capped. Maybe rural dwellings on large sites.

Hubertj

awec wrote: »

I don't think it would have much, if any impact on homeowners of existing properties if land prices were capped. Maybe rural dwellings on large sites.

how so? For example, 100 house estate built on land that cost €10M. Land price capped so same size piece of land in similar area now costs €4M. Much cheaper build costs so cheaper house prices (IF IF IF developer passes this on in retail price)??

Ozark707

Hubertj wrote: »

how so? For example, 100 house estate built on land that cost €10M. Land price capped so same size piece of land in similar area now costs €4M. Much cheaper build costs so cheaper house prices (IF IF IF developer passes this on in retail price)??

If prices drop considerably builders will lower the prices that they will pay for land anyway. I suspect gov just wants to bring it down a lot more (if they follow through of course)

awec

Hubertj wrote: »

how so? For example, 100 house estate built on land that cost €10M. Land price capped so same size piece of land in similar area now costs €4M. Much cheaper build costs so cheaper house prices (IF IF IF developer passes this on in retail price)??

Actually yea, it might indirectly cause prices to drop due to an increase of cheaper supply.

Hubertj

Ozark707 wrote: »

If prices drop considerably builders will lower the prices that they will pay for land anyway. I suspect gov just wants to bring it down a lot more (if they follow through of course)

i agree, i included IF before someone piped in about greedy developers.... so it asks the question how do you sell that to the public...

FVP3

TSQ wrote: »

My friend in Toronto moved house in her 50’s with a 30 year mortgage. She had a big deposit, maybe as much as 60%, from selling her old house, but still has hefty repayments as she bought bigger and in a better neighbourhood. Another friend in San Francisco bought her first house in her late 40’s on what appears to be a rolling 30 year mortgage, which means she can keep extending the term each time she remortgages (and I will admit, I am not sure how this works...I think you just keep going till the principal is paid off). She has also been able to remortgage to take advantage of better interest rates. Both friends are currently or will be paying off the mortgage well into their retirement. They would rather be mortgage free, who wouldn't, but have the security of substantial equity built up and the option to downsize if the repayments get too difficult on retirement income. Also, in SF and Toronto rents in the past 10 years have skyrocketed. They are paying less than if they had to rent, and have security of tenure. If they die before the mortgage is paid off, the bank has first claim on the proceeds of a sale. As for leaving a house to the kids, ff’s sake.
Here, in contrast, if you dont have cash and dont manage to buy a home, or if you want to upgrade, by your late 40’s or 50’s your are screwed, no matter if you have a big deposit. In other areas of business this would be called age discrimination.

you can still get 15 year mortgages here, as far as i know, into your 50s and later.

Do banks have a minimum borrowing amount. I will probably need to borrow 70 or 80 k when I buy. I'm in my early 40's.

FVP3

Hubertj wrote: »

this was discussed a few pages back, or possibly on another thread. I would like to see how it is operationalized - it could be like turkeys voting for xmas. What happens to people who have purchased houses at X prices where price of land accounts for significant %. Home owners are asked to vote for a referendum that could essentially put them in negative equity......? How do you sell that to the general public even though the intent is for the good of the country?
I think it is a good idea and needs to be done considering the crazy prices paid in some instances. How to sell it to the public is another challenge...

Although land is a cost to the developer it doesn't effect the price of the house being sold, unless the house has lots of land associated with it.

That said this would just be a subsidy to private developers.

awec

Deleted User wrote: »

Do banks have a minimum borrowing amount. I will probably need to borrow 70 or 80 k when I buy. I'm in my early 40's.

Yes banks have a minimum amount you can borrow to get mortgage rates, I think it's 40-50k usually.

Less than that and you're looking at a normal loan.

cnocbui

Hubertj wrote: »

this was discussed a few pages back, or possibly on another thread. I would like to see how it is operationalized - it could be like turkeys voting for xmas. What happens to people who have purchased houses at X prices where price of land accounts for significant %. Home owners are asked to vote for a referendum that could essentially put them in negative equity......? How do you sell that to the general public even though the intent is for the good of the country?
I think it is a good idea and needs to be done considering the crazy prices paid in some instances. How to sell it to the public is another challenge...

They can do that, and while they are at it, might as well cap salaries and the price of cars and the price of clothes, and food and childcare and bring in 5 year economic plans and call the country the Union of Socialist Irish Counties.

Good of the country, my arse.

Claw Hammer

FVP3 wrote: »

Although land is a cost to the developer it doesn't effect the price of the house being sold, unless the house has lots of land associated with it.

That said this would just be a subsidy to private developers.

The cost of the land has the greatest effect on the price of many. houses. In the case of apartments the cost of the land can be a high percentage of the overall cost. If a developer by land with planning for 100 houses, he is pay x per site. that cost in its entirety must be passed on to each purchaser of the houses if the developer is to make a profit.

SozBbz

rosmoke wrote: »

If you ring Bank Of Ireland - New mortgages department they will tell you to try in a couple of days as all their efforts are towards dealing with existing customers that are asking to suspend their mortgage payments.

Where are now all those folks saying prices are going up?

Who is saying prices are going up? I havent see that. There are people saying they won't go down much, but thats not the same thing. There are also people saying that transactions are going to be massively down, but again thats not the same thing.

Villa05

fliball123 wrote:

Good luck with building in the back arse of Leitrim so see how many ghost estates you can put up

Plenty of land inside and around the m50

Paulownia

I wonder if a developer is building on land bought cheaply if they would price the house or apartment accordingly or by what they could achieve in the marketplace

GreeBo

FVP3 wrote: »

The same number of people will be able to buy houses as houses would be cheaper. The opposite of what happens if you increase the length of the mortgage.

(The only possible problem is builders not building at lower prices )

Why would the houses be cheaper though?

They won't just drop due to lack of demand as going from 35-20 year mortgage is a huge change, building costs arent going to change, so all you are doing is decreasing builder profits, so they will target specific profitable units.

GreeBo

JimmyVik wrote: »

And they were all queuing up for BTL before this were they?

No, but house prices werent dropping by the 30-50% posters on this thread are indicating....isnt that the point?