How does the bank lending rules help the working class?

Donald Trump

Rock77 wrote: »

I kind of follow you but not sure I agree with you. You say ‘in your example you can’t afford the cheapest house regardless of the CB limits’ that part I don’t follow. I’m 10 grand short, surely if I can borrow more I now have enough..?

Think of it this way. Suppose yourself and Pat both want a house. There are only two bidders at the auction and it has just been put on the market by the auctioneer at 200k.
You can pay 260k for it (mixture of mortgage and deposit/savings). Pat only has access to 250k.

Then you pay 251k for the house.

Now suppose, before the auction, Pat's Bank increase his approval to 290k. But they increased for everyone and so now you can spend 300k.
Now you pay 291k for the house.

Giving you both more credit just made the previous owner wealthier.

LuckyLloyd

Buy a two bed terrace. Or an apartment.

Why does it have to be a three bed semi D? Also, why is Ballyfermot or Tallaght not an option?

Q&A

2Mad2BeMad wrote: »

I think the rules need to be changed, and its not only to suit me but to suit alot of people.

It can't just be a 3.5 and thats it, there has to more to look into then that.

Put simply it's not....

...the CBI mortgage rule allows for 20% of first time buyers to borrow in excess of 3.5

https://centralbank.ie/consumer-hub/explainers/what-are-the-mortgage-measures

There is flexibility in the current system. It's up to you to convince a bank you're a better candidate than others. Have you talked to a bank?

s1ippy

2Mad2BeMad wrote: »

Hi everyone,

Just wanted to start a discussion thread on the 3.5 rule the banks have and how its affecting you in getting a house. (hoping this thread is ok)

Myself and my partner currently earn 55k a year (gross).

According to AIB using there calculator we can get a loan of €192.500
along with paying 10percent, we can buy a house worth €213,889.
Obviously the calculator is only a guide and I'd expect the approved loan to be even less then that.

We live in Dublin and have lived here all our lives, our family are here,friends and we both work here as well (start of careers)

Now its all well and good in saying " tough **** you can't afford to live here move outside Dublin" But that reply is snobbery, its not a good answer to the problem thousands of people are having.

You can't buy a house in Dublin for 213k, or at least one that does not need a considerable amount of investment to make it livable.

So there is 2 options, increase the rules from 3.5 to 4.5/5
or House prices need to fall dramatically( which in turn creates a whole host of other problems)


We looked at houses near the commuter belt and all seem reasonable we are still priced out of them though, some are just about within the price range but if a bid starts happened we will get priced out very quickly.
So we have to move abit futher out again.

Now here is were the main issue is.
If we moved out far for example say Athy, yes it ain't far in terms of going once, but to do it 5 times a week plus traffic in and out would be soul destroying.

I found a house there for 159k for what ever reason its that price, but its obviously well within our lending criteria so we could afford it.
BUT for us to move down there, we would end up having to buy

2 cars (i already own 1 car but would need a new one as current one wouldnt last very long doing the mileage)
insurance x2
tax x2
nct x2
petrol x2
tolls x2
More car maintenance.
The reason for 2 cars is we both work in opposite ends of Dublin.

And thats just the cost of the getting back into Dublin

That cost far outweighs the price of increasing the 3.5 to 4.5/5.

Now I'm not a complete idiot, I also understand why the rules are at the moment set at 3.5 because of the last crisis people borrowed more then they could and the banks were only to willing to let them borrow it.

I'm just looking for a general discussion, if you can afford in Dublin, thats good for you but this problem of people who can't apparently afford to live in Dublin should just pack up and move away is not the answer. There is alot more people who can't buy in Dublin then there is who can buy.

Myself and my partner, currently pay 2k rent a month, and have done for the past 2 years and likely to continue paying it for the next 2 years.
We could easily afford a mortage of 300k, which would give us at least some options in Dublin. Not to mention the price of the mortage a month would mean we would be saving money every month because it wont be a 2k mortage, it would most likely be less then 1500 a month.

I think the rules need to be changed, and its not only to suit me but to suit alot of people.

It can't just be a 3.5 and thats it, there has to more to look into then that.

This is only for discussion and to rant (slight rant) over the rules.

I'm sure there is some very valid points as to why it can't be increased but I can only see it from my perspective as well as the perspective of other low income workers.

I mean Guarda,nurses all essential workers that keep people in this country safe can't afford a mortage. (not comparing my work to theres they are far more important but being able to compare my wage to a guarda is quite bad on there end)

I don't wish to leave Dublin, It would end up costing me more to live outside Dublin then to live in.

I would hold out, if you can, for more savings and try and see if you can increase your earnings through overtime or getting extra work elsewhere. On top of that 10% deposit you're going to need to fork out for paying solicitors and other professionals, Stamp Duty, home and life insurance, repairs and furnishings (I think you need to have like several grand to hand for this)... My partner and I are aiming to have at least €30k on hand by the time we put down the deposit for a place.

It's a terrible market to be going into right now. I think in a years time property value is going to absolutely plummet, due to the lack of buying and selling in the next year. I'd hang on if I were you, you might get one of the Airbnb gaf's when all their owners finally get their comeuppance.

Is 'working class' even a thing any more?

If the OP is:
> On ~€27.5k;
> With a second income coming into the household;
> At the start of their career;
> Is able to afford to live in a €2k pm residence;
I'd say they're doing pretty well for themselves.

The issue isn't the bank's lending criteria (which largely comes from the CBI anyway), it's the house prices. The house prices are ridiculous due to lack of supply.

Relaxing lending criteria will only flood the market with more buyers, raise prices further, and increase the risk of default. Banks will suffer huge losses and be forced to sell people's homes. Then everyone will ask 'Why aren't the banks helping people?'. Banks aren't charities - they're businesses with a duty of care towards the customers they provide services to. It's not their job to make sure people get housing, it's their job to make sure that they only lend to people that they're sure can afford it.

Rock77

true-or-false wrote: »

Is 'working class' even a thing any more?

If the OP is:
> On ~€27.5k;
> With a second income coming into the household;
> At the start of their career;
> Is able to afford to live in a €2k pm residence;
I'd say they're doing pretty well for themselves.

The issue isn't the bank's lending criteria (which largely comes from the CBI anyway), it's the house prices. The house prices are ridiculous due to lack of supply.

Relaxing lending criteria will only flood the market with more buyers, raise prices further, and increase the risk of default. Banks will suffer huge losses and be forced to sell people's homes. Then everyone will ask 'Why aren't the banks helping people?'. Banks aren't charities - they're businesses with a duty of care towards the customers they provide services to. It's not their job to make sure people get housing, it's their job to make sure that they only lend to people that they're sure can afford it.

But if the OP can afford 2 grand a month rent for the last few years surely they can afford €1200 a month mortgage repayments. Even if that loan is 4 times their income?

Surely a stress test is enough, why does it have to be capped at 3.5?

I understand house prices will go up but they are up anyway.. how do u lower them?

I’m not just talking one or two people here, everyone on under €35,000 per year! That’s a lot of people,some paying well over what a mortgage repayment would be.

Rock77

Donald Trump wrote: »

Think of it this way. Suppose yourself and Pat both want a house. There are only two bidders at the auction and it has just been put on the market by the auctioneer at 200k.
You can pay 260k for it (mixture of mortgage and deposit/savings). Pat only has access to 250k.

Then you pay 251k for the house.

Now suppose, before the auction, Pat's Bank increase his approval to 290k. But they increased for everyone and so now you can spend 300k.
Now you pay 291k for the house.

Giving you both more credit just made the previous owner wealthier.

I get that the house price will go up.

My point is,

At the moment Pat can borrow 3.5 x €75,000= €245,000 + deposit €25,000

Total 270,000

Cheapest house where Pat lives is €285,000


€75,000 x 4 = €300,00 + deposit €25,000
Pat now has €325,000

That house was €285,000 and because more people can afford it it sells (to Pat) for €310,000

Pat pays €2000 per month rent for the last 5 years, his repayments are now €1300 per month. Pat realises he paid more than the asking but feels it’s worth it.

So there is a chance if the current rules are changed that Pat could buy a house where he’s from.

If they are not changed Pat can not buy the house.

I do realise I’m looking at this quite selfishly but there’s a lot more people than me this affects.

Alternatively, just drop house prices.......!

LuckyLloyd

It has to be capped at 3.5 because most people see the amount they can borrow as a target rather than a maximum. If it was lifted to 4.5 or 5 then we would have most FTBs borrowing those ratios.

It is in the public good that people borrow realistic ratios of their income. It is also in the public good that people start with equity in their house (ideally you wouldn’t be able to be gifted the 10%, but I digress). Our housing market has structural issues that require difficult solutions. Raising the lending cap just creates deeper potential problems, while forcing prices up across the board via additional debt. There is no justification for it from a societal perspective. It also won’t solve the “dilemma” faced by the OP.

The OP needs to explain why a two bed terrace or a less expensive area isn’t suitable for his purposes imo.

Salary Negotiator

Rock77 wrote: »

I get that the house price will go up.

My point is,

At the moment Pat can borrow 3.5 x €75,000= €245,000 + deposit €25,000

Total 270,000

Cheapest house where Pat lives is €285,000


€75,000 x 4 = €300,00 + deposit €25,000
Pat now has €325,000

That house was €285,000 and because more people can afford it it sells (to Pat) for €310,000

But what actually happens is the house sells for about €330K and Pat still can't afford it.

What you don't seem to fully understand is that everyone is in the same boat. There are 100 houses to sell and 101 couples looking to buy, all things being equal the couple on the lowest income will be the ones who can't buy a house.

Looking at income mulitpliers, CB rules etc won't change the fact that the couple with the lowest income will always struggle to buy when there is a shortage of houses because they will be outbid on each and every house by couple who earn more.

Quite simply Pat needs to earn more or hope that demands falls to the point that there are more houses than couples.

Rock77

LuckyLloyd wrote: »

It has to be capped at 3.5 because most people see the amount they can borrow as a target rather than a maximum. If it was lifted to 4.5 or 5 then we would have most FTBs borrowing those ratios.

It is in the public good that people borrow realistic ratios of their income. It is also in the public good that people start with equity in their house (ideally you wouldn’t be able to be gifted the 10%, but I digress). Our housing market has structural issues that require difficult solutions. Raising the lending cap just creates deeper potential problems, while forcing prices up across the board via additional debt. There is no justification for it from a societal perspective. It also won’t solve the “dilemma” faced by the OP.

The OP needs to explain why a two bed terrace or a less expensive area isn’t suitable for his purposes imo.

So how do you bring house prices down? Build more houses? Is there any other way?

This is about more than the OP, I mentioned before. Bar workers, hairdressers, barbers, factory Ops, Quality Control, cashiers, laundry workers, cleaners, warehouse staff, even assistant managers in most places I worked are on less than €40,000 per year.

Most of these people can easily afford a loan of 4 times their income, Some pay a lot more in rent..

Graham

An individual can't bring house prices down so must consider things that they can do.

Improve their financial position. Better job, payrise, family gift, savings etc.
Alternative methods of funding (Rebuilding Ireland Loan).

The sad truth is, not everybody is going to be in a position where they can buy their own home.

Rock77

Salary Negotiator wrote: »

But what actually happens is the house sells for about €330K and Pat still can't afford it.

What you don't seem to fully understand is that everyone is in the same boat. There are 100 houses to sell and 101 couples looking to buy, all things being equal the couple on the lowest income will be the ones who can't buy a house.

Looking at income mulitpliers, CB rules etc won't change the fact that the couple with the lowest income will always struggle to buy when there is a shortage of houses because they will be outbid on each and every house by couple who earn more.

Quite simply Pat needs to earn more or hope that demands falls to the point that there are more houses than couples.

The minimum wage in Ireland is €19,000ish and the average is €39,000ish.

So you and your partner would have to earn more than the average to afford a 3 bed semi in Celbridge..

That leaves a lot of people stuck paying high rent. I understand it wouldn’t be easy but what kind of things could a government do to help these people? Or should they be doing things to help?

Is there nothing wrong? Should people just save more? I know they have help to buy and 10% deposits for ftb’s.

Rock77

Graham wrote: »

An individual can't bring house prices down so must consider things that they can do.

Improve their financial position. Better job, payrise, family gift, savings etc.
Alternative methods of funding (Rebuilding Ireland Loan).

The sad truth is, not everybody is going to be in a position where they can buy their own home.

Only people on more than the average wage it seems... that’s a lot of people left behind..

Graham

Rock77 wrote: »

That leaves a lot of people stuck paying high rent. I understand it wouldn’t be easy but what kind of things could a government do to help these people? Or should they be doing things to help?

Both great questions.

The requirement for more social housing is almost a given at this point as far as I can see.

It is harder to argue that everyone should be able to buy a home regardless of their personal circumstances.

Eric Cartman

Salary Negotiator wrote: »

But what actually happens is the house sells for about €330K and Pat still can't afford it.

What you don't seem to fully understand is that everyone is in the same boat. There are 100 houses to sell and 101 couples looking to buy, all things being equal the couple on the lowest income will be the ones who can't buy a house.

Looking at income mulitpliers, CB rules etc won't change the fact that the couple with the lowest income will always struggle to buy when there is a shortage of houses because they will be outbid on each and every house by couple who earn more.

Quite simply Pat needs to earn more or hope that demands falls to the point that there are more houses than couples.

the problem is more like :

there is enough land to build 10x 20 storey blocks of 200 apartments in Dublin, but some people who own Georgian houses or 2 storeys in sandy mount gave out and now instead of 2000 apartments they're only building 400 on that land in some low rise developments. those 1600 people now compete for properties outside of the canals , but outside the canals the council and cluid are writing cheques for social housing too, driving up those prices , but some of that housing can't be built because Richard Boyd barret Clare daly have objected to social housing near their parents gafs, so the council and cluid compete further and further out along any public transport links, pricing workers out of areas with transport, so now those who need to work in Dublin are shuffled all the way to Ashbourne, navan, Naas, Gorey etc... so they need to drive to work, but the Green Party and the social democrats want to tax the arse off them for having to do so and the lads who live in Georgian houses in Dublin sit around in naff pubs wearing their lycra cycling gear and say 'but why are these fools killing the planet, can they not just bike to work like me'

Rock77

Rock77 wrote: »

Surely a stress test is enough, why does it have to be capped at 3.5?

It's not. Each bank has a limited number of exceptions they can make each year for customers that can demonstrate their ability to repay.

Rock77 wrote: »

So how do you bring house prices down? Build more houses? Is there any other way?

Is there nothing wrong?

Yes of course you build more houses. I'd also suggest certain changes to the way social and charitable housing is structured, and rules/regs around development but that's going off topic.

No one is saying there's nothing wrong - we're in the middle of a housing crisis. But saying that the banks just need to give people more money is short-sighted at best, and will only make matters worse. It'll still be the same small percentage of people with the best buying-power that will get the houses.

Rock77

true-or-false wrote: »

It's not. Each bank has a limited number of exceptions they can make each year for customers that can demonstrate their ability to repay.


Yes of course you build more houses. I'd also suggest certain changes to the way social and charitable housing is structured, and rules/regs around development but that's going off topic.

No one is saying there's nothing wrong - we're in the middle of a housing crisis. But saying that the banks just need to give people more money is short-sighted at best, and will only make matters worse. It'll still be the same small percentage of people with the best buying-power that will get the houses.

I don’t think the banks just need to give people more money, I do however think it would be a good start. As far as I can see it would raise the chances of a lot of people buying a home.

The general consensus here though is the CB rules are sound and it’s elsewhere that the issues are.

So I will just hope a new government is formed and they address these issues! While saving as much as possible of course...

LuckyLloyd

Rock77 wrote: »

So how do you bring house prices down? Build more houses? Is there any other way?

This is about more than the OP, I mentioned before. Bar workers, hairdressers, barbers, factory Ops, Quality Control, cashiers, laundry workers, cleaners, warehouse staff, even assistant managers in most places I worked are on less than €40,000 per year.

Most of these people can easily afford a loan of 4 times their income, Some pay a lot more in rent..

Build more houses, in particular the State must build many more social and affordable houses

Parallel to that, lower wage workers need to consider the full range of their options. One bed apartments; terrace houses; commuter towns; etc.

The rent argument vs mortgage repayment argument doesn’t stack up. It feels right, but it is a purely short term consideration. Rents will not be this high forever; interest rates will not be this low forever. Loading on an extra 2x your salary in debt because your repayment may be shorter than rent now when that repayment is a 35 year commitment doesn’t make sense.

Rock77

LuckyLloyd wrote: »

Build more houses, in particular the State must build many more social and affordable houses

Parallel to that, lower wage workers need to consider the full range of their options. One bed apartments; terrace houses; commuter towns; etc.

The rent argument vs mortgage repayment argument doesn’t stack up. It feels right, but it is a purely short term consideration. Rents will not be this high forever; interest rates will not be this low forever. Loading on an extra 2x your salary in debt because your repayment may be shorter than rent now when that repayment is a 35 year commitment doesn’t make sense.

Many workers on 30 - 35k which is a decent wage in my opinion have or want to have a family so a one bed is no good to them, most terraced houses in this particular commuter town are new so are priced higher than a second hand 3 bed semi.

It doesn’t matter if rents won’t be this high forever or to a lesser extent interest rates won’t be this low. The point is a mortgage repayment of €1300 per month is clearly affordable to someone who has payed 2k per month rent and saved €500 per month for the last 5 years.

And I suggested loading an extra .5 times your salary not x2

I just think it’s too restrictive, I get it has to be done but I just think 3.5 is too low

ELM327

Why not go for a new build and get the deposit matched by the help to buy?

Eric Cartman wrote: »

the problem is more like :

there is enough land to build 10x 20 storey blocks of 200 apartments in Dublin, but some people who own Georgian houses or 2 storeys in sandy mount gave out and now instead of 2000 apartments they're only building 400 on that land in some low rise developments. those 1600 people now compete for properties outside of the canals , but outside the canals the council and cluid are writing cheques for social housing too, driving up those prices , but some of that housing can't be built because Richard Boyd barret Clare daly have objected to social housing near their parents gafs, so the council and cluid compete further and further out along any public transport links, pricing workers out of areas with transport, so now those who need to work in Dublin are shuffled all the way to Ashbourne, navan, Naas, Gorey etc... so they need to drive to work, but the Green Party and the social democrats want to tax the arse off them for having to do so and the lads who live in Georgian houses in Dublin sit around in naff pubs wearing their lycra cycling gear and say 'but why are these fools killing the planet, can they not just bike to work like me'

Agree 110%

Rock77

ELM327 wrote: »

Why not go for a new build and get the deposit matched by the help to buy?






Agree 110%

New builds within 20km of where I’m from are all slightly out of reach for the same reason a second hand house is. I can only borrow 3.5 times my income.

Salary Negotiator

Rock77 wrote: »

New builds within 20km of where I’m from are all slightly out of reach for the same reason a second hand house is. I can only borrow 3.5 times my income. don't earn enough.

Sorry to keep banging this drum, but it's important that you understand why you can't buy a house so that you can take positive steps to improve your situation.

Ush1

Salary Negotiator wrote: »

Sorry to keep banging this drum, but it's important that you understand why you can't buy a house so that you can take positive steps to improve your situation.

Username checks out!:pac:

Rock77

Salary Negotiator wrote: »

Sorry to keep banging this drum, but it's important that you understand why you can't buy a house so that you can take positive steps to improve your situation.

Ah no I get it, I have a plan and am on course to get there. I am working with the assumption the CB rules will not change to benefit me.

Sheep Shagger

Rock77 wrote: »

Ah no I get it, I have a plan and am on course to get there. I am working with the assumption the CB rules will not change to benefit me.

Good stuff - that's a safe assumption, best of luck.

https://www.myhome.ie/residential/brochure/93-milltown-estate-ashbourne-co-meath-a84-dy04/4414632

245k, Ashbourne is barley outside Dublin.

Ashbourne has lots of facilities for familys.

The OP has a good bit of choice its just a matter of a few compromises.

lalababa

The blame for high price of dwellings in Dublin lies at the council's feet. And by extension FF & FG.
Through ineptitude/ fear and electioneering they have come up with a city comprised of a 35mile suburbia. The radius is growing as we type.

ELM327

lalababa wrote: »

The blame for high price of dwellings in Dublin lies at the council's feet. And by extension FF & FG.
Through ineptitude/ fear and electioneering they have come up with a city comprised of a 35mile suburbia. The radius is growing as we type.

I agree.
What they have done is created a 3 tier society, as follows:

• Lifetime social welfare - This group are given heavily subsidised housing in the city/surrounds
• Upper Middle class and upward - This group can afford to live where they want, including DCC, but often choose not to
• Lower middle class and below, eg menial workers or minimum wage/sub 30k jobs, these folks cannot afford to live in DCC unless it's a bad area. And often they earn just too much to qualify for social support

This is the problem. And I lay the blame firmly at the socialist elements of government.

Donald Trump

ELM327 wrote: »

I agree.
What they have done is created a 3 tier society, as follows:

• Lifetime social welfare - This group are given heavily subsidised housing in the city/surrounds
• Upper Middle class and upward - This group can afford to live where they want, including DCC, but often choose not to
• Lower middle class and below, eg menial workers or minimum wage/sub 30k jobs, these folks cannot afford to live in DCC unless it's a bad area. And often they earn just too much to qualify for social support

This is the problem. And I lay the blame firmly at the socialist elements of government.

An area is usually "bad' only due to the people who live there. Of course, it might lack other facilities, but that can be a chicken and egg scenario too. Under a "capitalist" government, that would obviously be magnified. In terms of it you take the full extension and have people live where they can afford.

ELM327

Donald Trump wrote: »

An area is usually "bad' only due to the people who live there. Of course, it might lack other facilities, but that can be a chicken and egg scenario too. Under a "capitalist" government, that would obviously be magnified. In terms of it you take the full extension and have people live where they can afford.

As opposed to the current bastardization (yes it's a word) of the current hybrid of capitalism and socialism, taking the worst of both, allowing the freeloaders free (or 90% subsidized) access to housing where those paying their own way and not receiving state support cannot.

LuasSimon

ELM327 wrote: »

I agree.
What they have done is created a 3 tier society, as follows:

• Lifetime social welfare - This group are given heavily subsidised housing in the city/surrounds
• Upper Middle class and upward - This group can afford to live where they want, including DCC, but often choose not to
• Lower middle class and below, eg menial workers or minimum wage/sub 30k jobs, these folks cannot afford to live in DCC unless it's a bad area. And often they earn just too much to qualify for social support

This is the problem. And I lay the blame firmly at the socialist elements of government.

More people will be looking at been in the Lifetime social welfare class than the lower middle income class .

I know people who never worked who have corporation houses in Dublin whilst some others who got modest jobs are killing themselves trying to pay a mortgage on some average house in co kildare and driving 10 hours a week . Who has the better life ??
If you have a family youd need to have a very good job to better a free house and welfare in Dublin

Donald Trump

ELM327 wrote: »

As opposed to the current bastardization (yes it's a word) of the current hybrid of capitalism and socialism, taking the worst of both, allowing the freeloaders free (or 90% subsidized) access to housing where those paying their own way and not receiving state support cannot.

I think you took something else from my point. I was simply saying that most areas are not inherently "bad". There were once fields there. Those fields were not inherently bad. We're not talking about back in the day with the environmentally polluted area of town or downwind of the local dump or downstream of the local river which is used as the sewerage drain. They are not living in tidal marshes that flood. It is the people who make shite of an area. It doesn't matter where you put them. It's obviously not all the people either. But enough to cause the trouble and deterioration.

But to your point, the wealthy generally do not get social housing in their areas. Maybe a few token ones here or there. So if you don't want to mix with what you consider freeloaders, then you either have to earn more, or try to draw that line lower beneath you. Either you move above that line, or you try to move that line below you.
Going for the latter seems easier but it might not have the results that you envision.

lomb

You can buy a house in Detroit for cash https://www.ebay.com/itm/2-story-house-duplex-/262009423109
Classic example of supply and demand as well as too many houses for number of jobs coupled with low social welfare payments

fret_wimp2

Central bank lending rules are not your problem OP.

Forget the lending rules for a sec.
Imagine everyone in Ireland was gifted 1 million euro each.
We can all afford houses exactly where we want now right?

Or, bidding wars start in the most desirable areas, and people with extra money on top of that million euros end up being able to buy.
House prices simply all go up by a million quid.
That 200k house you can afford in an area you find less desirable is now valued at €1,200,000.

Increase the amount people can borrow and an identical scenario unfolds.
The market will find equilibrium, and those with more money will have more choice of where to live.

Your choices are to earn more money, come into money via a windfall or adjust your expectations.
Some people want to live in Blackrock or dalkey but can't afford it so have to buy elsewhere.
Likewise some people want a house within the m50 but can't afford it and have to either buy elsewhere or rent.

Central Bank rules are not a problem for you, your current earnings are.
It's harsh, but it's reality and we all have to face it.

Eric Cartman

lomb wrote: »

You can buy a house in Detroit for cash https://www.ebay.com/itm/2-story-house-duplex-/262009423109
Classic example of supply and demand as well as too many houses for number of jobs coupled with low social welfare payments

detroits problem is a massive crime rate, particularly violent crime, crack addiction riddles Detroit, also the property taxes are a nightmare. You can buy houses in Detroit for $10 , but you'll owe 5 grand a year in taxes on them.

ELM327

fret_wimp2 wrote: »

Central bank lending rules are not your problem OP.

Forget the lending rules for a sec.
Imagine everyone in Ireland was gifted 1 million euro each.
We can all afford houses exactly where we want now right?

Or, bidding wars start in the most desirable areas, and people with extra money on top of that million euros end up being able to buy.
House prices simply all go up by a million quid.
That 200k house you can afford in an area you find less desirable is now valued at €1,200,000.

Increase the amount people can borrow and an identical scenario unfolds.
The market will find equilibrium, and those with more money will have more choice of where to live.

Your choices are to earn more money, come into money via a windfall or adjust your expectations.
Some people want to live in Blackrock or dalkey but can't afford it so have to buy elsewhere.
Likewise some people want a house within the m50 but can't afford it and have to either buy elsewhere or rent.

Central Bank rules are not a problem for you, your current earnings are.
It's harsh, but it's reality and we all have to face it.

Great post
Should be mandatory for any lefty loon td (SF, AAA/PBP etc I'm looking at you) to read and comprehend this.

Rock77

ELM327 wrote: »

Great post
Should be mandatory for any lefty loon td (SF, AAA/PBP etc I'm looking at you) to read and comprehend this.

So everyone in Dublin and surrounding areas that doesn’t earn above the average wage will just have to pay crazy high rent while trying to save a deposit. It’s not a select few that this affects.

Will we carry on with only the well off being able to afford a home and have a serious lack of social and affordable housing?

People keep saying, you need to earn more. 30k to 35k is a very decent wage and also a wage well capable of paying back mortgage repayments of €1200 per month. considering the minimum wage is 20k ish.

It’s not the loony left that has us in this complete mess.

Eric Cartman

Rock77 wrote: »

So everyone in Dublin and surrounding areas that doesn’t earn above the average wage will just have to pay crazy high rent while trying to save a deposit. It’s not a select few that this affects.

Will we carry on with only the well off being able to afford a home and have a serious lack of social and affordable housing?

People keep saying, you need to earn more. 30k to 35k is a very decent wage and also a wage well capable of paying back mortgage repayments of €1200 per month. considering the minimum wage is 20k ish.

It’s not the loony left that has us in this complete mess.

Its not that you cant buy a house, you just cant buy a house in dublin city. If we refused to keep giving in to the demands of the perpetually unemployed it would be a lot easier to live in or around dublin, its not the wealthy keeping you out of houses in dublin, its government policy requiring social housing and bodies like cluid competing bidding up prices pushing working people put of the city and replacing them with layabouts

Rock77

Eric Cartman wrote: »

Its not that you cant buy a house, you just cant buy a house in dublin city. If we refused to keep giving in to the demands of the perpetually unemployed it would be a lot easier to live in or around dublin, its not the wealthy keeping you out of houses in dublin, its government policy requiring social housing and bodies like cluid competing bidding up prices pushing working people put of the city and replacing them with layabouts

I want to buy a house in North Kildare not Dublin.

My point was it’s government policy that’s the problem. It was in response to a poster who mentioned the loony left..

Eric Cartman

Rock77 wrote: »

I want to buy a house in North Kildare not Dublin.

My point was it’s government policy that’s the problem. It was in response to a poster who mentioned the loony left..

it was government policy called for by the left. Developers having to build 10% minimum social housing, cluid, etc...

if anything houses would be more unaffordable if you had a 'left' government.

ELM327

Rock77 wrote: »

So everyone in Dublin and surrounding areas that doesn’t earn above the average wage will just have to pay crazy high rent while trying to save a deposit. It’s not a select few that this affects.

Will we carry on with only the well off being able to afford a home and have a serious lack of social and affordable housing?

People keep saying, you need to earn more. 30k to 35k is a very decent wage and also a wage well capable of paying back mortgage repayments of €1200 per month. considering the minimum wage is 20k ish.

It’s not the loony left that has us in this complete mess.

It is the left aspects of government and the notion that someone earning 30-35k is a good wage.
In Dublin this is not a good wage. It's about average. The weighted average for a FTE excluding the top 1% is around 34k. So if you have 2 people on 34k you are able to afford an average house. 3.5 times 2*34k is 238k. Whack the 10% deposit with that and you could easily buy a 3 bed semi in Dublin.


1200 per month on a mortage for a single earner on 34k would not be a good move as that would be >50% of their net income on a mortgage


You need to earn more if you want a nice house in a good area. Average wage can afford average house. Simples.

Rock77

ELM327 wrote: »

It is the left aspects of government and the notion that someone earning 30-35k is a good wage.
In Dublin this is not a good wage. It's about average. The weighted average for a FTE excluding the top 1% is around 34k. So if you have 2 people on 34k you are able to afford an average house. 3.5 times 2*34k is 238k. Whack the 10% deposit with that and you could easily buy a 3 bed semi in Dublin.


1200 per month on a mortage for a single earner on 34k would not be a good move as that would be >50% of their net income on a mortgage


You need to earn more if you want a nice house in a good area. Average wage can afford average house. Simples.

Cheapest house where I’m from is 280k and I don’t live or want to live in Dublin.

Myself and my partner earn more than the average wage yet we can’t borrow enough for the worst house in our area never mind an average house..

The €1200 per month was based on two earners..

Geuze

ELM327 wrote: »

It is the left aspects of government and the notion that someone earning 30-35k is a good wage.
In Dublin this is not a good wage. It's about average. The weighted average for a FTE excluding the top 1% is around 34k. So if you have 2 people on 34k you are able to afford an average house. 3.5 times 2*34k is 238k. Whack the 10% deposit with that and you could easily buy a 3 bed semi in Dublin.
.

Data on FTB and SSB average earnings are published by the Central Bank.

Hard to find, though.

https://www.centralbank.ie/financial-system/financial-stability/macro-prudential-policy/mortgage-measures/new-mortgage-lending-data-and-commentary

https://www.centralbank.ie/docs/default-source/financial-system/financial-stability/macroprudential-policy/mortgage-measures/data-on-new-mortgage-lending/new-mortgage-lending-data-2018.xlsx?sfvrsn=4


2018 report

FTB average earnings 2018 = 73,536
2017 = 70,230


70% are joint applicants.

The average LTI = 3

beauf

#1 Govt policy has priced people out of housing.

#2 People have unrealistic expectations of doing better or at least the same as their parents. Live in similar areas etc.


Most will actually be worse off, and wealth inequality is getting worse not better. The Instagram lifestyle many are striving will not exist, for most people.

ELM327

Geuze wrote: »

Data on FTB and SSB average earnings are published by the Central Bank.

Hard to find, though.

https://www.centralbank.ie/financial-system/financial-stability/macro-prudential-policy/mortgage-measures/new-mortgage-lending-data-and-commentary

https://www.centralbank.ie/docs/default-source/financial-system/financial-stability/macroprudential-policy/mortgage-measures/data-on-new-mortgage-lending/new-mortgage-lending-data-2018.xlsx?sfvrsn=4


2018 report

FTB average earnings 2018 = 73,536
2017 = 70,230


70% are joint applicants.

The average LTI = 3

Does that not support my point though... that people on average wages can afford average houses?

Rock77

ELM327 wrote: »

Does that not support my point though... that people on average wages can afford average houses?

Average houses or the worst houses in the worst areas of Dublin..

fret_wimp2

Rock77 wrote: »

Average houses or the worst houses in the worst areas of Dublin..

This is now in the realm of subjectivity. Lots of people wouldn't consider living north of the river but thst doesn't mean the whole area is bad.

Your definition of average and worst will be different from others. You'l then probably find an extreme example on daft to support your Opinion and I can then do the same for mine.

Dublin is small and often prices will vary wildly street by street.
E.G. A friend has an address of kilbarrick, a stereotypically questionable area. I'm not saying it's bad, I'm just saying there is a reputation.

His house is directly behind his parents house, which has an address of raheney, a stereotypicaly nice area.

His back garden actually touches his parents back garden.

His house was almost half the value of his parents house. His area is lovely, the street looks the same, the houses are almost identical.

That's just one example of how good / bad area is subjective.


Back to the argument of affordability, very few can afford to live in D6w as it's massively desirable. I can't afford it so I don't, I live where I can afford.

Similar with everyone, they live where they can afford. In a capital city, property going to be expensive so the barrier to entry goes up.

Should I be angry I can't afford a house in d6w?
Maybe just angry that I might be only able to afford the "worst" house in D6w but not an average or good one?

All rhetorical, of course I shouldn't be angry about it.

Geuze

ELM327 wrote: »

Does that not support my point though... that people on average wages can afford average houses?

Sorry, I did not read your posts in detail, sorry.

Rock77

fret_wimp2 wrote: »

This is now in the realm of subjectivity. Lots of people wouldn't consider living north of the river but thst doesn't mean the whole area is bad.

Your definition of average and worst will be different from others. You'l then probably find an extreme example on daft to support your Opinion and I can then do the same for mine.

Dublin is small and often prices will vary wildly street by street.
E.G. A friend has an address of kilbarrick, a stereotypically questionable area. I'm not saying it's bad, I'm just saying there is a reputation.

His house is directly behind his parents house, which has an address of raheney, a stereotypicaly nice area.

His back garden actually touches his parents back garden.

His house was almost half the value of his parents house. His area is lovely, the street looks the same, the houses are almost identical.

That's just one example of how good / bad area is subjective.


Back to the argument of affordability, very few can afford to live in D6w as it's massively desirable. I can't afford it so I don't, I live where I can afford.

Similar with everyone, they live where they can afford. In a capital city, property going to be expensive so the barrier to entry goes up.

Should I be angry I can't afford a house in d6w?
Maybe just angry that I might be only able to afford the "worst" house in D6w but not an average or good one?

All rhetorical, of course I shouldn't be angry about it.

I do see the point your making but Dublin has extreme price differences. Of course someone is priced out of some areas and can easily afford others.

My point is, I’m from North Kildare. Every couple from my town or the five surrounding towns that does not earn well above average wage can not get a loan to buy the worst 3 bed semi in any of these towns. There are so many people and couples on or below the average wage..

Rent is so high that it makes it an extremely slow process to save a deposit.

Both myself and my wife earn over the average wage, have over a 10% deposit and an excellent saving record and can easily afford the repayments for a 3 bed semi in our town yet there are CB rules that won’t allow us.

My issue is we can afford to live here....

2k per month rent + €500 per month savings for years versus €1200 per month mortgage repayments. I believe I can afford to live here so it’s not a case of ‘should I be angry because I can’t afford to live in a particular area’

I now understand that raising the 3.5 times your income will raise house prices but surely someone somewhere in politics is intelligent enough to come up with a system where people earning average wages can afford some sort of a house.

fret_wimp2

Rock77 wrote: »

I now understand that raising the 3.5 times your income will raise house prices but surely someone somewhere in politics is intelligent enough to come up with a system where people earning average wages can afford some sort of a house.

It would require more market regulation and in every single instance where the government has Intervened with property they have made the situation worse.

They gave a 1st time buyers grant. It simply raised the price of all new builds by about 20k.

They put in rent caps, it just meant most landlords raised rents right up to the cap, otherwise they would be locked into lower rate. It also meant landlords who were often content to leave good tenants alone now raise their rents year on year by the 4%

They put in the 10% quotas for social housing, but allowed developers to buy out of it by building the social housing elsewhere , negating any benefit of spreading out social housing. This also causes a lot of angst with someone who has spent 300k or more on a house and right next door is someone with the same house for buttons. It also reduced the pool for people like you and me. I'm not disagreeing with social housing here, just how it affected the market.

They charge capital gains tax against small landlords rental income, but provide so much support for tenants thst a single problem Tennant can cause a landlord a 18 months of hassle and cost to get their property back, creating too much risk, causing them to leave the market in droves reducing the rental pool.

They give favorable conditions to large REITs, bringing in a rent for life system, but with none of the legislation for lifetime leases needed for such a model. This also takes huge swaths of new builds away from the irish market of people looking to buy a home.

They took away bedsits. Bedsits are not ideal but they provided cheap accommodation for some people who ended up with nowhere to go except the street and homeless services or illegal dorms.

That's probably far from complete but you get the picture government intervention has rarely helped the people, in the context of the property market.


To allow you to compete with someone on twice your wages, they would need to hinder the person with more resources through tax or rules and/or give you a Leg up.
There is unfairness here too as the person with more resources has most likely worked for them and such a rule would be like tying a rock to their feet because they have more.

Contrary to what concensus usually is on boards, most people who afford houses in nicer areas are also hard workers. They might have gotten lucky and got some good career breaks, but most are not sitting on family fortunes and old money. They're not villains.

A rule could be made to allow people below a certain earning level borrow more, but how much more? Take that 35k a year person and assume they want to buy a 300k house.

They need to save 10%, 30k.
This leaves 270k of a loan. That's almost x8 that persons annual salary!

The risk is much too high when the lenders wouldn't even give that level of exemption to someone on multiples of 35k.

You want a situation where price of property and the idea of investment, supply and demand is completely sepersted, So a house in high demand in dublin is obtainable by a below average wage. That's the very opposite of how property is treated in Ireland. A cultural change of that magnitude won't happen in our lifetimes.

It's a tough situation but it's a modern fact of Life many find unfair. I don't have an answer.