Irish Property Market 2020 Part 3

BryanMartin21

I agree with the above posts but in the absence of any alternative proposal and considering this seems to be all FF and FG are capable of, the sooner the better. The current situation with a destructive and catastrophic housing crisis cannot be allowed to persist. It's an out for those stuck paying ridiculously high rents.

JimmyVik

Graham wrote: »

Probably fair to say that's your interpretation and not what's actually being proposed.

There are thousands of people around the country who are currently paying significantly more in rent than a mortgage would cost.

If they run into trouble with the mortgage and cant pay, I wonder who gets first dibs at repossessing the house. The state or the lender.

Villa05

What's that song they sing before West Ham home matches

Aahh that's it: Forever blowing bubbles

Fianna fail should adopt it, why stop there make it the national anthem

Taxpayers and your children start saving and working alot harder, your about to be fleeced again

hometruths

Graham wrote: »

Probably fair to say that's your interpretation and not what's actually being proposed.

Certainly fair to say it was Karl Deeter's interpretation.

Graham wrote: »

There are thousands of people around the country who are currently paying significantly more in rent than they would be paying in mortgage repayments .

I don't disagree but I am not sure how that is relevant to the comment I posted.

hometruths

JimmyVik wrote: »

If they run into trouble with the mortgage and cant pay, I wonder who gets first dibs at repossessing the house. The state or the lender.

Given the lenders find it tricky enough to repossess when the state is not involved, I cannot imagine it will make it simpler for them!

Timing belt

Graham wrote: »

Probably fair to say that's your interpretation and not what's actually being proposed.

There are thousands of people around the country who are currently paying significantly more in rent than they would be paying in mortgage repayments .

It’s something like:
33% of the population own there homes out right
33% own there homes with a mortgage
33% renting (20% private 10% public)

The people who own their have homes will be against it the people renting will be for it.

Until we get more details it is hard to evaluate the proposal. But it is a fair point that there are renters paying significantly more in rent than they would on a mortgage.

Graham

schmittel wrote: »

I don't disagree but I am not sure how that is relevant to the comment I posted.

It doesn't really gel with the "can't afford it" interpretation if they're currently paying more.

While it's not the perfect solution, I don't think there is actually a perfect solution.

hometruths

Graham wrote: »

It doesn't really gel with the "can't afford it" interpretation if they're currently paying more.

While it's not the perfect solution, I don't think there is actually a perfect solution.

There is certainly an obvious solution.

If the government are trying to solve the problem that people pay more in rent than a mortgage - i.e they can afford the mortgage - why not tell the banks to allow rent payment history into affordability calculations?

That would seem to make more sense.

brisan

schmittel wrote: »

There is certainly an obvious solution.

If the government are trying to solve the problem that people pay more in rent than a mortgage - i.e they can afford the mortgage - why not tell the banks to allow rent payment history into affordability calculations?

That would seem to make more sense.

House prices would rise
House prices are pitched at the max people can afford ,not their true cost
The 3.5 LTI limit is the only thing keeping house prices down

hometruths

brisan wrote: »

House prices would rise
House prices are pitched at the max people can afford ,not their true cost
The 3.5 LTI limit is the only thing keeping house prices down

Agree, but all that holds true as well if the state are pitching in with 30% of purchase price.

The benefit of allowing rent payments is to relax deposit/saving rules not LTI rules, i.e if somebody is struggling to save a deposit/display savings history because of rent commitments, allow them the value of their rental payment history.

If the bank is not prepared to take the risk on the grounds that the LTV would be too high, I don't see why the taxpayer should.

Graham

schmittel wrote: »

There is certainly an obvious solution.

If the government are trying to solve the problem that people pay more in rent than a mortgage - i.e they can afford the mortgage - why not tell the banks to allow rent payment history into affordability calculations?

That would seem to make more sense.

I doubt the central bank would allow it.

I would assume (hope) the shared ownership element makes the repayments affordable for more people while still allowing a stress-cushion for any changes in interest rates.

hometruths

Graham wrote: »

I doubt the central bank would allow it.

I would assume (hope) the shared ownership element makes the repayments affordable for more people while still allowing a stress-cushion for any changes in interest rates.

Ok, well if we're saying the scheme is being introduced because the "shared ownership element makes the repayments affordable" it seems like Karl Deeter had a fair point.

brisan

Graham wrote: »

I doubt the central bank would allow it.

I would assume (hope) the shared ownership element makes the repayments affordable for more people while still allowing a stress-cushion for any changes in interest rates.

If the builder thinks the Government is prepared to chip in 120k on a 400k house the builder will want his share
House will go to 430-450k

Graham

schmittel wrote: »

Ok, well if we're saying the scheme is being introduced because the "shared ownership element makes the repayments affordable" it seems like Karl Deeter had a fair point.

I still don't think his point is valid.

There's a difference between 70% being affordable and 100% being affordable.

That's before you even look at the differences between the cost of renting compared to buying.

He might have a more valid point if the proposal were to just give everyone a 100% mortgage. It's not.

awec

schmittel wrote: »

There is certainly an obvious solution.

If the government are trying to solve the problem that people pay more in rent than a mortgage - i.e they can afford the mortgage - why not tell the banks to allow rent payment history into affordability calculations?

That would seem to make more sense.

I think the deposit problem also plays a part.

hometruths

Graham wrote: »

I still don't think his point is valid.

There's a difference between 70% being affordable and 100% being affordable.

Sure there is a difference, in one scenario you cannot afford to buy the house and in the other you can!

hometruths

awec wrote: »

I think the deposit problem also plays a part.

Agreed.

schmittel wrote: »

The benefit of allowing rent payments is to relax deposit/saving rules not LTI rules, i.e if somebody is struggling to save a deposit/display savings history because of rent commitments, allow them the value of their rental payment history.

If the bank is not prepared to take the risk on the grounds that the LTV would be too high, I don't see why the taxpayer should.

Graham

schmittel wrote: »

Sure there is a difference, in one scenario you cannot afford to buy the house and in the other you can!

In one scenario you can't afford to buy a house.

In the other scenario you can afford to buy 70% of a house because it costs 30% less.

Smouse156

BryanMartin21 wrote: »

https://www.irishtimes.com/news/politics/affordable-housing-plan-will-see-state-take-up-to-30-equity-with-first-time-buyers-1.4440041

A new affordable housing plan due to be put to Cabinet next week. The State will take up to a 30% equity in new homes with FTBs and no arbitrary salary caps to be eligible for the scheme.



Another measure



If these measures get the home building increased dramatically, then they are necessarily a good thing.

What a joke! Inflate overpriced property even further by giving houses to people that can’t afford them. What’s next? 110% mortgages with no income multiple caps...I wonder how that will turn out?

Rip-off Republic well and truly alive!

hometruths

Graham wrote: »

In one scenario you can't afford to buy a house.

In the other scenario you can afford to buy 70% of a house because it costs 30% less.

The house that you can only afford to buy 70% of is not costing 30% less - somebody else is paying for that 30%. In this case your fellow taxpayer.

BryanMartin21

Smouse156 wrote: »

What a joke! Inflate overpriced property even further by giving houses to people that can’t afford them. What’s next? 110% mortgages with no income multiple caps...I wonder how that will turn out?

Rip-off Republic well and truly alive!

You are misinterpreting what "can't afford them" means.

Remember, it is only aimed at FTBs so there is still a ceiling on affordability based on the 3.5 borrowing limit (perhaps 600k price limit for joint applicants?). Mortgage repayments on 550k borrowing would be around 2k per month.

Compare the house you can get for 600k versus the rental you can get for 2k per month. It is night and day.

Graham

schmittel wrote: »

The house that you can only afford to buy 70% of is not costing 30% less - somebody else is paying for that 30%. In this case your fellow taxpayer.

Somebody else also owns that 30%, in this case 'your fellow taxpayer'.

Sounds like a much better deal than the approach du jour of long term REIT leases.

BryanMartin21

Graham wrote: »

Somebody else also owns that 30%, in this case 'your fellow taxpayer'.

Sounds like a much better deal than the approach du jour of long term REIT leases.

Exactly. It's the alternative scenario which this new proposal needs to be compared to. REITs with non-Irish investors hoovering the wages of Irish people out of the country versus this scenario where the State has a portion of the asset.

Now, that's not to say this proposal does not have the fingerprints of the builders' lobby on it but at least Irish people can have a better chance to own their own home, which is what this country is about.

hometruths

Graham wrote: »

Somebody else also owns that 30%, in this case 'your fellow taxpayer'.

Indeed. The reason being you cannot afford the buy the house.

Graham wrote: »

Sounds like a much better deal than the approach du jour of long term REIT leases.

Long term REIT leases are for social housing, this is for private housing.

Sue it will be grand as long as prices continue to rise. At least it will provide a transparent and justifiable reason for the government to wish for permanently rising house prices.

JimmyVik

BryanMartin21 wrote: »

You are misinterpreting what "can't afford them" means.

Remember, it is only aimed at FTBs so there is still a ceiling on affordability based on the 3.5 borrowing limit (perhaps 600k price limit for joint applicants?). Mortgage repayments on 550k borrowing would be around 2k per month.

Compare the house you can get for 600k versus the rental you can get for 2k per month. It is night and day.

So if 3.5 times your salary gets you a loan of 75% of the value of the property you are in?
Sounds like circumventing of the CB rules to me. Would be better off just increasing the limit from the CB than that.
At least then the tax payer isnt on the hook.

BryanMartin21

JimmyVik wrote: »

So if 3.5 times your salary gets you a loan of 75% of the value of the property you are in?
Sounds like circumventing of the CB rules to me. Would be better off just increasing the limit from the CB than that.
At least then the tax payer isnt on the hook.

Where is the billion euro rental assistance money coming from each year? Who will pay for the mass social housing building programme? And are FTBs not also taxpayers?

The tax payer is embedded in the Irish housing market, that is a null and void argument you are making in response to this new proposal.

hometruths

BryanMartin21 wrote: »

Where is the billion euro rental assistance money coming from each year? Who will pay for the mass social housing building programme? And are FTBs not also taxpayers?

The tax payer is embedded in the Irish housing market, that is a null and void argument you are making in response to this new proposal.

Apart from the fact the cost per unit is artificially high I don't have a problem with taxpayers money being spent on social housing/HAP. Quite the opposite, I think it is a necessary spend.

The problem I have is that the cost is too high because the government is forced into paying high market prices driven by the private housing market.

This new scheme is going to add fuel to the private housing market fire, further increasing the cost of social housing.

It is utter madness.

lawred2

schmittel wrote: »

Apart from the fact the cost per unit is artificially high I don't have a problem with taxpayers money being spent on social housing/HAP. Quite the opposite, I think it is a necessary spend.

The problem I have is that the cost is too high because the government is forced into paying high market prices driven by the private housing market.

This new scheme is going to add fuel to the private housing market fire, further increasing the cost of social housing.

It is utter madness.

government intervention in the market is a prime contributor to the upwards trajectory of high prices

the state isn't a passive player

JimmyVik

lawred2 wrote: »

government intervention in the market is a prime contributor to the upwards trajectory of high prices

the state isn't a passive player

For both purchase and rental prices.

BryanMartin21

schmittel wrote: »

Apart from the fact the cost per unit is artificially high I don't have a problem with taxpayers money being spent on social housing/HAP. Quite the opposite, I think it is a necessary spend.

The problem I have is that the cost is too high because the government is forced into paying high market prices driven by the private housing market.

This new scheme is going to add fuel to the private housing market fire, further increasing the cost of social housing.

It is utter madness.

Is it though? Average rent of 2k per month is 200k in 8 years. I think if we say the ceiling for FTBs is 600k then that is the maximum cost per person to take a 30% stake.

However, whoever is in social housing now is going to be unable to borrow anywhere near that. Therefore, let's say the State needed to give 100k - 150k to a purchaser to borrow for a house, that's only 4 - 6 years of rental assistance. Not a big cost at all in this context (also noting the State has a 30% ownership stake in the house too).