Irish Property Market chat II - *read mod note post #1 before posting*

Villa05

https://www.boards.ie/discussion/comment/119770274#Comment_119770274

If the major cause of the crash was bad lending, how come arrears did not sky rocket until after the crash.

The major cause is unemployment, increased taxation and lower wages that come from years of bad policy.

The lessons of poor policy have not been learnt, therefore lending limits can only cushion rather than avoid a crash. Yesterday concrete blocks were put under that cushion. Let's hope there pyrite infected

drogon.

https://www.boards.ie/discussion/comment/119770419#Comment_119770419

Hence I don't buy the theory that if you can pay 2K rent today.. you can continue to pay that during a downturn/recession on a mortgage.

Dav010

https://www.boards.ie/discussion/comment/119770613#Comment_119770613

But you think if you could afford a house last week/last month/last year, and got a mortgage, you will be able to afford to pay during a downturn/recession? That risk always exists as few people are guaranteed to be able to afford repayments over the lifetime of a mortgage, life has a habit of throwing up the unexpected. But if your mortgage is below the cost of your rent, and you are making capital repayments with a fair chance of your property increasing in value over the term of a mortgage, ownership is preferable, and there should be no reason why you shouldn’t be able to borrow a little more if it is below the cost of the rent you can afford to pay.

Bad lending practice was not the only cause of the 2008 crash, but it certainly made matters far worse.

drogon.

https://www.boards.ie/discussion/comment/119770974#Comment_119770974

But again, it depends on what percentage of your salary is going to rent. Say if a couple is on 80K a year, after tax their monthly income is about €5,000. At the moment they have no choice but to pay 2K a month in rent (which is about half their salary) as they no other option, do you think the bank should still lend then money on the hopes they continue to pay 40% of their salary on a mortgage ?

Cyrus

https://www.boards.ie/discussion/comment/119771092#Comment_119771092

But they wont in most cases.

4*80k = 320,000 max mortgage (assuming no child care costs etc), at 3% over 30 years that is 1,350 a month or 31% of their net salary.

drogon.

https://www.boards.ie/discussion/comment/119771105#Comment_119771105

Fair enough I suppose.. but there are multiple assumptions there

• Would you be able to get anything decent for 320K in the same area you are renting in, probably not.
• Would the higher leading rate just not cause a crazy bidding war.. So a couple on 100K would always win
• 3% interest rate now sounds fine, but who knows how high it can be. People expect ECB rates to be hoovering around 2.5%~3% by mid next year.

Either way we shall wait and see how it plays out, time will tell.

Cyrus

https://www.boards.ie/discussion/comment/119771159#Comment_119771159

As to the first point who knows, often the issue with renting is that you rent a house that you can afford to buy and it makes it hard to move, but plenty of anecdotal stories on this thread of people who reckon mortgage payments would be substantially lower than rents given the current rental market.

On the second point, it comes down to what people value a property at, someone with more income can always spend more than you but they may have a limit that they value a property at. Hard to be definitive on that.

Lastly you can fix for 5-10 years at lowish rates at the moment, i dont think anyone is taking a variable mortgage right now.

Dav010

https://www.boards.ie/discussion/comment/119771092#Comment_119771092

Doesnt that risk apply to all lenders/borrowers? But both take into consideration what the conditions are today, plus the stress test applied by the bank.

It is hard to see what argument people have for allowing people who want to buy a home to borrow a little more, knowing that I’m all likelihood mortgage repayments will be less than the cost of renting the same home, or one that is inferior. It smacks of begrudgery, they earn more, they can borrow more, so they can pay more. Such is life.

jimmybobbyschweiz

And just like that all those pandemic profits and savings are gone. The government throwing a life raft out to he economy to avoid economic catastrophe. Who would've thought the economy was so fickle and prosperity could evaporate just like that?

https://m.independent.ie/business/finance-minister-paschal-donohoe-defends-inclusion-of-data-centres-in-energy-subsidy-scheme-42082836.html

L1011

https://www.boards.ie/discussion/comment/119771358#Comment_119771358

That article does not back up your claim, and is wildly off topic.

jimmybobbyschweiz

https://www.boards.ie/discussion/comment/119771375#Comment_119771375

Okay, here is the link; the economy and property market in Ireland are being propped up by the government. People argue somehow the situation is sustainable despite the fact the government are pumping billions into keeping both property prices and rents; and the economy afloat. Data centre users are huge tech companies that made massive profits during COVID now all of a sudden have no cash and need government support to keep the data centres running; the only reasonable conclusion is that in fact the economy is in dire straits which is why the government needs to intervene now.

What we can all see is a rental market with half of tenants getting state support, a government suppressing new home supply and throwing fuel on the demand side at the same time, now we see almost every business in the state being given billions of taxpayer money to stay afloat. If things were so rosy, none of this would be necessary but the writing is on the wall for the property market and wider economy. Why else would the government need to throw billions of taxpayer money into propping up private companies? Why are evictions being banned in the rental market? There is real head in the sand stuff right now to not believe that a huge crash is barely being prevented by desperate government intervention.

Cyrus

https://www.boards.ie/discussion/comment/119771453#Comment_119771453

10k a month is keeping tech co's afloat 😂

jimmybobbyschweiz

https://www.boards.ie/discussion/comment/119771475#Comment_119771475

No, there is another scheme for them that of course Pascal had no details on as undoubtedly it is going to be very generous, too generous in fact.

Mr Donohoe said the Temporary Business Energy Support Scheme (TBESS) would be of “very limited use” to large energy users such as data centres because there is a €10,000 monthly cap on support.

The Government intends to introduce a separate subsidy scheme for larger energy users later in the year, Mr Donohoe said, without giving any more details.

L1011

https://www.boards.ie/discussion/comment/119771453#Comment_119771453

Again, the article doesn't actually say any of that. You are projecting, grabbing any random thing to try support it. Please stop

quokula

https://www.boards.ie/discussion/comment/119771105#Comment_119771105

In most cases, their salary will go up over time too so that percentage of salary will decrease each year.

If you lock in a mortgage today, the repayments 20 years from now will be the same as the repayments next month (barring adjustments for interest rate changes which are unlikely to be anything remotely close to 20 years of inflation, plus they could go down too)

If you rent for the next 20 years, that rent will go up almost every single year and on the whole will rise with inflation on average.

In both cases your income will almost certainly go up every year too, in line with inflation and probably inline with growing experience and movement up the career ladder, barring unforeseen events and shocks that can of course happen (but if they do the banks aren't really allowed to kick you out anyway)

So in general mortgages usually only ever get more affordable over time. With the current high inflation, we'll probably see higher wage growth to keep up in the next few years, which is another reason why increasing the multiple of current salaries is probably not the end of the world.

Villa05

https://www.boards.ie/discussion/comment/119771613#Comment_119771613

Did we not have a graph recently showing that household income peaks between 30 and 40 and declines from there. With avg ftb at early 30's, I'm not so sure your analysis is correct

Family commitments, reduced hours etc

Villa05

https://www.boards.ie/discussion/comment/119771486#Comment_119771486

There was a degree of kickback by employees against large highly profitable multinationals for participating in the TWSS scheme during covid,

There is something abhorrent about large companies feeding off the taxpayer, when they are already one of the greatest beneficiaries through education and infrastructure grants etc

As I understand it, also, if the grid is unable to provide the power needs of these companies and they have to switch to diesel generators, Compensation has to be paid to these companies, this includes data centres

It would be an incredible brain fart of an idea to subsidise larger consumers of energy in such circumstances. Give reduced rates for off peak hours instead.

Im aware of a number of companies that have installed wind turbines to help power there plants. What is this stupidity telling them with a so called green party part of government

fliball123

https://www.boards.ie/discussion/comment/119770079#Comment_119770079

Just seen this on myhome

https://www.myhome.ie/residential/brochure/clonmore-ballyvinitir-mallow-cork/4651464

Can anyone tell me how these can be built and sold for such a low price. The builders in and around Dublin must be coining it. There will be some small extra expense build in Dublin. The cheapest new builds I have seen is in Garristown which is further out from Dublin city center than parts of Meath, Kildare and Wicklow and anything else except Garristown is nearly half a million dearer.

https://www.myhome.ie/residential/brochure/chapel-hill-chapel-hill-garristown-county-dublin/4637623

Sierra Oscar

https://www.boards.ie/discussion/comment/119774212#Comment_119774212

Surely the cost of acquiring land is a significant cost for developers that feeds into prices in Dublin?

A 10 acre site in Mallow is going to be a fair bit cheaper than a 10 acre site in Dublin.

fliball123

https://www.boards.ie/discussion/comment/119774226#Comment_119774226

Yeah but to the tune of about half a million per dwelling it cant be that high

Higgins5473

One reason which is rarely mentioned why we now have such strict lending rules, and also why so many commercial banks have bailed leaving essentially a duopoly of lenders here is that notion of mortgages being "secured loans" is just that, a notion. It is extremely hard for banks to repossess the secured asset on a bad loan here, ridiculously so.

For case in point, look at that gobshite Twink or the O Donnells and the Gorse Hill charade, properties worth millions with "owners" heavily in debt with f*ck all to their name yet near impossible to repossess the house. Those are high profile cases but they are a dime a dozen in this country, all you need is a sob story and you'll be allowed to stay put for lengthy court proceedings at the expense of the tax payer and then possibly remain for the rest of your days there.

hometruths

https://www.boards.ie/discussion/comment/119774231#Comment_119774231

Well said. I'm consistently amazed why this does not cause more anger. It's a directly contributing factor to the underlying problems of the housing crisis but it seems anybody is fair game to blame except for those who have treated their mortgage payments as optional.

Any other country these people would be out on their ear, sod the sob story.

Villa05

https://www.boards.ie/discussion/comment/119769898#Comment_119769898

Ireland's 4th largest city, I think, by population

Sierra Oscar

The CSO have released the latest Wholesale Price Index figures. Doesn't make for pretty reading for the construction industry.

https://www.cso.ie/en/releasesandpublications/ep/p-wpi/wholesalepriceindexseptember2022/

Notable annual increases in construction products as shown in Table 3 include:

Structural Steel & Reinforcing Metal, Structural Steel, Fabricated Metal 64.4%

All Other Materials, Pipes & Fittings, PVC 29.2%

Bituminous Macadam, Asphalt and Bituminous Emulsions, Bituminous Emulsions 27.6%

All Other Materials, Pipes & Fittings, Copper 26.1%

Other Concrete Products, Precast Concrete 25.1%

Ready Mixed Mortar and Concrete 24.8%

The Building and Construction index (i.e. Materials and Wages) decreased by 0.4% in the month but increased by 10.1% in the 12 months to September 2022.

This index combines the All Materials Index with a measure of the change in wages in the construction sector to provide an overall index for input construction costs. See Table 4.

MacronvFrugals

Shared equity, HTB and 4X income

Some 508 buyers have been approved for the shared equity First Home scheme since in it was launched in the summer, with close to 2,000 more people registering an interest in the scheme.

Most of the successful applicants have bought homes in Dublin, and in the commuter belt of Kildare, Meath and Wicklow.

https://www.independent.ie/business/personal-finance/property-mortgages/huge-interest-in-governments-shared-equity-mortgage-scheme-42084816.html

jj880

https://www.boards.ie/discussion/comment/119774325#Comment_119774325

@AdamD seemed to have a reason in mind on why "nobody wants to live in Derry". I was just curious as to what it was.

Villa05

https://www.boards.ie/discussion/comment/119774226#Comment_119774226

Certainly gives us an indication of what the state could do/fund to affect supply given that they are the largest owner of land

Why would you spend 750k on a 2 bed apartment, when you have all the ingredients to build 3 houses for the same outlay

It's pretty clear that the industry and not common sense is dictating policy.

Villa05

https://www.boards.ie/discussion/comment/119774360#Comment_119774360

I wonder did the wholesale industry get wind of the fact that the taxpayer would be funding projects that the investment funds were abandoning hence the premium.

Price increases seem to be at odds with recent developments in the commodities market

Villa05

For anyone contemplating a long term investment, it might be worthwhile to listen to the following podcast. The guest predicted the 2008 crash and called the risks of the QE response to covid correctly. Have some valium closeby

https://open.spotify.com/episode/396tdcm6tahIeqlVWdW3w5

Timing belt

https://www.boards.ie/discussion/comment/119774688#Comment_119774688

all commodities list need high levels of energy so 100% makes sense.