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

JDD

genericgoon wrote: »

While it would be difficult to do this at granularity suggested, it is possible to compare median house prices (Residential Property Price Index) versus median household gross income (Census + income inflation estimate from SILC) for each local authority area. If the idea is that the average household should be able to buy the average house, this broadly makes sense.

Using Central Bank rules (3.5 times income, deposit of 15% (splitting difference between FTB and other buyers)) as a "target" price for the median household, a basic analysis suggests that house prices would need to fall ~45% in Dún Laoghaire-Rathdown LEA (target: 305k, actual: 540k) and by at least 15% in all the Dublin LEA, Dublin commuter belt (Wicklow, Meath, Kildare) and cites with a distinct LEA (Cork, Galway). Note that housing inflation is quite aggressive so this is likely getting worse rather than better. Table here: https://ibb.co/X5RTVbM

Though house prices could increase by 100% in Roscommon and Longford and only be slightly above the "target".

So by that measure the average house is €540k in DLR, but the median income for a couple in that local authority area is only €74k? I seriously doubt that is the case, given the average income in Dublin is approx €45k for a single person and you'd expect those living in DLRR (Killiney/Dalkey/Foxrock etc) already to skew that income level up over the average for Dublin as a whole.

I know this is getting far too granular, but we'd want to be thinking about what we think is a reasonable age to buy a house. If we think that you *should* be able to buy a house between the ages of 30-40, we need to be looking at the median income of couples in that age category, in that local authority, and see whether they can afford to buy a modest house. If not, what is the gap between the income level and the market value of that modest house, and if that gap is large, what is causing it.

I think it's acceptable to say that couples who are just out of college should not be expecting to be in a position to buy a house.

I think it is also reasonable to say that the days of a single income being able to afford a house are gone. If needed, we could use the same algorithm to calculate whether the median single income in a local authority area could reasonably be expected to buy a 2 bed apartment in that area.

timmyntc

JDD wrote: »

So by that measure the average house is €540k in DLR, but the median income for a couple in that local authority area is only €74k? I seriously doubt that is the case, given the average income in Dublin is approx €45k for a single person and you'd expect those living in DLRR (Killiney/Dalkey/Foxrock etc) already to skew that income level up over the average for Dublin as a whole.

I know this is getting far too granular, but we'd want to be thinking about what we think is a reasonable age to buy a house. If we think that you *should* be able to buy a house between the ages of 30-40, we need to be looking at the median income of couples in that age category, in that local authority, and see whether they can afford to buy a modest house. If not, what is the gap between the income level and the market value of that modest house, and if that gap is large, what is causing it.

I think it's acceptable to say that couples who are just out of college should not be expecting to be in a position to buy a house.

I think it is also reasonable to say that the days of a single income being able to afford a house are gone. If needed, we could use the same algorithm to calculate whether the median single income in a local authority area could reasonably be expected to buy a 2 bed apartment in that area.

A higher than average proportion of pensioners in DLR who have quite low incomes perhaps.
Bought the houses long ago, now their income is reduced.

genericgoon

JDD wrote: »

So by that measure the average house is €540k in DLR, but the median income for a couple in that local authority area is only €74k? I seriously doubt that is the case, given the average income in Dublin is approx €45k for a single person and you'd expect those living in DLRR (Killiney/Dalkey/Foxrock etc) already to skew that income level up over the average for Dublin as a whole.

I know this is getting far too granular, but we'd want to be thinking about what we think is a reasonable age to buy a house. If we think that you *should* be able to buy a house between the ages of 30-40, we need to be looking at the median income of couples in that age category, in that local authority, and see whether they can afford to buy a modest house. If not, what is the gap between the income level and the market value of that modest house, and if that gap is large, what is causing it.

I think it's acceptable to say that couples who are just out of college should not be expecting to be in a position to buy a house.

I think it is also reasonable to say that the days of a single income being able to afford a house are gone. If needed, we could use the same algorithm to calculate whether the median single income in a local authority area could reasonably be expected to buy a 2 bed apartment in that area.

Median age in Ireland is around 36.5 with a median household size of 2.75. While this doesn't map exactly onto your criteria it is hardly a huge push from your definition of a household who should be able to purchase a home.

JohnK

jill_valentine wrote: »

[...]
This is just such an obvious disaster on the way. A very sizeable number of these people are going to wind up trying to pay off their mortgage with a state pension.
[...]

From what I've seen the max duration of the mortgage is lower as you get older so it'll always have to be paid off in full by the time you turn (I think) 67 - doesn't matter if you start the mortgage at 35, 45, or 55. Biggest problem with this is it means each extra year it takes to find a suitable house is one less year you can get the mortgage for so your monthly payments will be higher which then makes the affordability harder especially with the stress test on it.

MacronvFrugals

Villa05 wrote: »

What I found interesting is that FF were talking SF policy. I know she is not senior FF but she seemed under severe pressure which may have impacted her many slips.
Eoin is a highly skilled communicator and you could see how he was complimenting the crazy house prices creator that there was very smart politicking going on

I have little thrust in Irish politics, were they in power and making things worse I won't be shy in calling them out

Look the way they wont on with nine units being brought back into stock, TicToks in all, gone be the days FF were building 80k a year!


https://twitter.com/Caolanmcaree/status/1397884080696565760?s=20

Zenify

MacronvFrugals wrote: »

Look the way they wont on with nine units being brought back into stock, TicToks in all, gone be the days FF were building 80k

He lost all credibility with the affordable housing scheme. Every last drop is now gone!

timmyntc

MacronvFrugals wrote: »

Look the way they wont on with nine units being brought back into stock, TicToks in all, gone be the days FF were building 80k a year!


https://twitter.com/Caolanmcaree/status/1397884080696565760?s=20

Only explanation for the music is that theyre both in La la land

Villa05

timmyntc wrote:

A higher than average proportion of pensioners in DLR who have quite low incomes perhaps. Bought the houses long ago, now their income is reduced.

With prices in the area, only social and affordable policies can afford to buy/lease in the area. This would probably bring down the average earnings

Mad_maxx

Timmyr wrote: »

Yea its quite different than Ireland, I'm from Mayo where you generally live in one house for your entire life.
Here houses are just treated as commodities, "getting on the ladder" is really the aim.

Since I've been here (5ish years), my girlfriends parents have lived in 3 separate "homes"

I lived and worked in NZ way back in 1998 , the country was really cheap back then , much cheaper than Ireland ,amazing how expensive it has become

cnocbui

I'd be concerned about buying property in NZ at current prices.



That's from a Bloomberg article about global housing bubbles: https://www.bloomberg.com/news/articles/2021-06-15/world-s-most-bubbly-housing-markets-flash-2008-style-warnings

As I would have suspected, Irish house price increases are very modest compared to the trend.

snow_bunny

MacronvFrugals wrote: »

Look the way they wont on with nine units being brought back into stock, TicToks in all, gone be the days FF were building 80k a year!


My God, what the **** is happening...

Amadan Dubh

Central Bank of Ireland has released its first financial stability review of 2021, which discuses the general economic state of affairs in the Irish economy including performance, risks and outlook. It also touches on property related matters as well.

A couple of interesting property related items included the commercial real estate sector outlook and details of the timeline for drawdown from mortgage approvals.

https://www.centralbank.ie/news/article/press-release-conditions-have-improved-but-recovery-may-be-bumpy-and-uneven-16-june-2021

The CRE market was considerably impacted by
the COVID-19 shock. CRE values on average declined 6 per cent from end-2019 to end-2020.
However, the decline has been much worse for retail CRE (19 per cent), in part reflecting larger
rental income falls for this sector (see Risks). Additionally, there has been reduced activity in the retail market, indicating a potential decline in liquidity. Anticipated declines in valuations and rents of 5 per cent in the next 12 months, point to a weak outlook for the CRE market. Additionally, the withdrawal of government supports to businesses, particularly in the hospitality and non-retail sectors, could potentially result in increased insolvencies that would also impact this sector.

Hubertj

Amadan Dubh wrote: »

Central Bank of Ireland has released its first financial stability review of 2021, which discuses the general economic state of affairs in the Irish economy including performance, risks and outlook. It also touches on property related matters as well.

A couple of interesting property related items included the commercial real estate sector outlook and details of the timeline for drawdown from mortgage approvals.

https://www.centralbank.ie/news/article/press-release-conditions-have-improved-but-recovery-may-be-bumpy-and-uneven-16-june-2021

[IMG][/img]https://www.boards.ie/vbulletin/attachment.php?attachmentid=556050&d=1623866709

Tough times for retail alright. PVH are paying about €2m to get out of their lease for the Tommy Hilfiger shop on graft on st as the landlord wouldn’t negotiate on the terms. But a little birdie is telling me that PVH will open 2 new shops (Tommy hilfiger and Calvin Klein) on grafton st in 2022/2023 when CRE rents have fallen significantly on grafton st…..

Ozark707

Hubertj wrote: »

Tough times for retail alright. PVH are paying about €2m to get out of their lease for the Tommy Hilfiger shop on graft on st as the landlord wouldn’t negotiate on the terms. But a little birdie is telling me that PVH will open 2 new shops (Tommy hilfiger and Calvin Klein) on grafton st in 2022/2023 when CRE rents have fallen significantly on grafton st…..

Makes sense. Once rents come down a lot you will see the prime areas fill back up. The less desirable areas...well I truly wonder what the future holds for them.

The more issues on way
The cheap labor which came back home to Eastern Europe does not want back to Ireland due with small wages and high rents
And better salaries and smaller rents in own countries
Government already crying that small busineses cant find workers
The shops owners from central part of Dublin was already talking about that before Covid
That they cant find low pay staff because rents sky high
This gona be interesting

MacronvFrugals

Revolution 1917 wrote: »

The more issues on way
The cheap labor which came back home to Eastern Europe does not want back to Ireland due with small wages and high rents
And better salaries and smaller rents in own countries
Government already crying that small busineses cant find workers
The shops owners from central part of Dublin was already talking about that before Covid
That they cant find low pay staff because rents sky high
This gona be interesting

Have tried to order a skip over the last few days and the earliest is two weeks they told me, 20 drivers (all eastern European) never returned

Balluba

The Central Bank is carrying out a review of mortgage lending rules. If things change and buyers are allowed to borrow four and a half times their salary will developers then just hike up their prices further ??

enricoh

Balluba wrote: »

The Central Bank is carrying out a review of mortgage lending rules. If things change and buyers are allowed to borrow four and a half times their salary will developers then just hike up their prices further ??

No, builders and developers are nice people and not money driven at all!

enricoh

enricoh wrote: »

No, builders and developers are nice people and not money driven at all!

I would say more
They could simply stop sell houses now because as they say they gona cost 7 per cent more next year !
What the point waste money to builders paying for overtime if houses gona cost more any way !
The slower they build them the more they could get for them later!

Ace2007

Balluba wrote: »

The Central Bank is carrying out a review of mortgage lending rules. If things change and buyers are allowed to borrow four and a half times their salary will developers then just hike up their prices further ??

Of course they will, sure half the crowd on boards are handing over their bank statements and all to the EA's that ask. Fast forward 2 years, and there will be calls to increase the limit to 5.5 salary

cnocbui

cnocbui wrote: »

I'd be concerned about buying property in NZ at current prices.



That's from a Bloomberg article about global housing bubbles: https://www.bloomberg.com/news/articles/2021-06-15/world-s-most-bubbly-housing-markets-flash-2008-style-warnings

As I would have suspected, Irish house price increases are very modest compared to the trend.

But for some reason smalest Irsish bubles explodes louder !

If its fresh information I think cockoo funds will drop property in Ireland in next 3-6 months.

Zenify

Balluba wrote: »

The Central Bank is carrying out a review of mortgage lending rules. If things change and buyers are allowed to borrow four and a half times their salary will developers then just hike up their prices further ??

The aim of busines is to maximize profit. Developers are no different. I don't blame the developers for hiking prices after the HTB was introduced and other schemes. I blame the incompetence of the people in charge of the policies and introducing schemes.

The review happens every year. They haven't changed them before and I haven't heard any suggestion about them changing. Maybe I've missed something they have announced?

Couldn't see any reason to increase them. Honestly, I see more reason to reduce them than increase. The CB is against people over borrowing, hence why the don't exactly approve of the shared equity scheme.

Especially with the risk of interest rates rising in the medium term due to inflation. I think the risks of people over borrowing and not being able to repay is far greater now since the celtic tiger.

Hubertj

Zenify wrote: »

The aim of busines is to maximize profit. Developers are no different. I don't blame the developers for hiking prices after the HTB was introduced and other schemes. I blame the incompetence of the people in charge of the policies and introducing schemes.

The review happens every year. They haven't changed them before and I haven't heard any suggestion about them changing. Maybe I've missed something they have announced?

Couldn't see any reason to increase them. Honestly, I see more reason to reduce them than increase. The CB is against people over borrowing, hence why the don't exactly approve of the shared equity scheme.

Especially with the risk of interest rates rising in the medium term due to inflation. I think the risks of people over borrowing and not being able to repay is far greater now since the celtic tiger.

I think that when a review was announced a couple of weeks ago some of the conspiracy theorists took that as a direction from government to central bank to increase limits.

I think I agree with most of your post but I don’t think they will reduce the limit.

Timing belt

Balluba wrote: »

The Central Bank is carrying out a review of mortgage lending rules. If things change and buyers are allowed to borrow four and a half times their salary will developers then just hike up their prices further ??

Can’t see them changing the rules until the supply side improves would only lead to more problems.

If they do make changes I can see further exemptions based on ability to repay for FTB and leaving everything else as is

Hubertj

Hubertj wrote: »

I think that when a review was announced a couple of weeks ago some of the conspiracy theorists took that as a direction from government to central bank to increase limits.

I think I agree with most of your post but I don’t think they will reduce the limit.

This is not conspiracy this is the facts

Mortgage approvals slumped by massive 48% over new year
https://extra.ie/2021/03/15/news/irish-news/mortgages-slump-new-year

Central Bank mortgage lending rules keeping house inflation down - ESRI
https://www.rte.ie/news/business/2021/0223/1198696-mortgage-esri-central-bank/

Economic recovery may be 'bumpy and uneven' - Central Bank
https://www.rte.ie/news/business/2021/0616/1228450-central-banks-financial-stability-review/


Buyers need mortgage rules to change so they can afford a home, Central Bank is warned​​​​​​

https://www.independent.ie/business/personal-finance/property-mortgages/buyers-need-mortgage-rules-tochangeso-they-can-afford-a-homecentral-bank-is-warned-40506651.html

There is no people on market who can afford pay today price !
This is the Bubble !
And Central bank will not change anything !

Villa05

MacronvFrugals wrote:

Have tried to order a skip over the last few days and the earliest is two weeks they told me, 20 drivers (all eastern European) never returned

I'd imagine PUP payments go further in Eastern Europe.

Hubertj

[Deleted User] wrote: »

This is not conspiracy this is the facts

Mortgage approvals slumped by massive 48% over new year
https://extra.ie/2021/03/15/news/irish-news/mortgages-slump-new-year

Central Bank mortgage lending rules keeping house inflation down - ESRI
https://www.rte.ie/news/business/2021/0223/1198696-mortgage-esri-central-bank/

Economic recovery may be 'bumpy and uneven' - Central Bank
https://www.rte.ie/news/business/2021/0616/1228450-central-banks-financial-stability-review/


Buyers need mortgage rules to change so they can afford a home, Central Bank is warned​​​​​​

https://www.independent.ie/business/personal-finance/property-mortgages/buyers-need-mortgage-rules-tochangeso-they-can-afford-a-homecentral-bank-is-warned-40506651.html

There is no people on market who can afford pay today price !
This is the Bubble !
And Central bank will not change anything !

It would be “facts” if you were a conspiracy theorist. The CB themselves said the rules have prevented prices increasing further. With the ongoing availability of credit and constrained supply this was a likely outcome.

JDD

The Central Bank won't change the lending limits. They may have considered it if Covid had led to a slump in property prices, and the market needed an injection of buyers, but since that didn't happen there's literally no motivation there for them to change the limits. They have been completely deaf so far to articles in newspapers and government pressure, and I imagine that will continue.

tigger123

JDD wrote: »

The Central Bank won't change the lending limits. They may have considered it if Covid had led to a slump in property prices, and the market needed an injection of buyers, but since that didn't happen there's literally no motivation there for them to change the limits. They have been completely deaf so far to articles in newspapers and government pressure, and I imagine that will continue.

I'm not sure that would motivate the Central Bank into adjusting the lending limits.

From the Central Bank website:

"As part of its goal to safeguard financial stability and contribute to the long term resilience of the financial system, the Central Bank has in place a series of mortgage measures. These measures were first introduced in 2015 and are reviewed on an annual basis. The measures are designed to ensure that banks and other lenders lend money sensibly. They are also designed to stop house buyers from borrowing more than they can afford and prevent excess credit from building up within the Irish financial system."

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

yagan

It's not domestic lending that driving our current bubble, it's the institutional funds, or dumb money as Wall Street calls pensions.

Villa05

cnocbui wrote:

That's from a Bloomberg article about global housing bubbles:

Thanks for posting, we'll worth a read. They say collectively that housing affordability has surpassed 2008 levels. Lots of warning signals flashing but no obvious trigger for a decline

For Ireland credit growth is negative while real house price growth puts us in the top 5, just goes to show the impact of the investment funds on the market.

These investment funds drive up rents to unsustainable levels thereby distorting the price to rent ratio

A very useful metric to establish the health of the Irish property market would be a rent to income metric

Wonder how the 2008 crash effects our overall metrics. Over supply in the regions with undersuppy in the cities, plus inability to deal effectively with long term arrears

Balluba

JDD wrote: »

The Central Bank won't change the lending limits. They may have considered it if Covid had led to a slump in property prices, and the market needed an injection of buyers, but since that didn't happen there's literally no motivation there for them to change the limits. They have been completely deaf so far to articles in newspapers and government pressure, and I imagine that will continue.

The Central Bank are now inviting input from the public on their current strategy. Apparently they will be holding ‘engagement’ and ‘listening’ events, in July.
Estate agents and the property industry are naturally in favour of raising the lending limits.
I am not convinced that the central Bank will leave lending limits unchanged.

tigger123

Balluba wrote: »

The Central Bank are now inviting input from the public on their current strategy. Apparently they will be holding ‘engagement’ and ‘listening’ events, in July.
Estate agents and the property industry are naturally in favour of raising the lending limits.
I am not convinced that the central Bank will leave rates unchanged.

What do you think would motivate them in changing the limits?

Balluba

tigger123 wrote: »

What do you think would motivate them in changing the limits?

Depends on what they hear at these engaging and listening events.
Why else are they holding them?

timmyntc

tigger123 wrote: »

What do you think would motivate them in changing the limits?

If they believe that house prices have risen beyond affordability and that the 3.5 rule is outdated - personally I dont believe this, but it could be argued that prices may never decline to a point where 3.5 income is enough anymore, as house price inflation goes beyond wage inflation, due to cost of materials and land rising.

Shedite27

Shedite27 wrote: »

Anyone able to point me in the direction of the largest Estate Agents in the country? Looking o see what % of market share Lisney, Sherry Fitz etc have. Google keeps point me to overall property market reports. Thanks

Sorry for bumping my own thread, but the discussion took off without an answer. Anyoe know of any reports on the breakdown of estate agents and who the biggest players are? Are any of the Irish estate agents public companies that would allow me to look through financial reports?

Ray Palmer

[Deleted User] wrote: »

There is no people on market who can afford pay today price !
This is the Bubble !
And Central bank will not change anything !

This is fundamental untrue. If nobody could afford to pay prices would not be rising and nobody would be buying anything. You are reading the information in a way that suits your views.
The last bubble was an over supply and cheap credit.
We are currently under supplying and credit is hard to get. Very different situation.

The articles you pointed to don't agree with you but are saying there is a larger inequity appearing as different industries were effected differently. Construction workers are now benefiting from the pandemic and charge more. Office workers saved money and never lost any income. Many younger office workers dropped their rental and moved home. Lots of stored income.

I get the feeling Irish people think the property market will return to bygone times where most people could buy a home. We had the highest homeownership in the world in 80s/90s. That was always going to change as we became more integrated in global economics. This was obviously going to effect property.

There are permanent changes that happened to the property market that started in the late 90s, they won't ever be reversed. People are having difficulty accepting this. It is weird somebody in their 20s going on about how houses were cheaper and easier to get in times before they were born. Often overlooking stamp duty and large interest rates.

tigger123

Balluba wrote: »

Depends on what they hear at these engaging and listening events.
Why else are they holding them?

They could well be holding them so afterwards they can say 'having taken on board the views of all stakeholders, we are content that the lending rules should not be modified'.

timmyntc wrote: »

If they believe that house prices have risen beyond affordability and that the 3.5 rule is outdated - personally I dont believe this, but it could be argued that prices may never decline to a point where 3.5 income is enough anymore, as house price inflation goes beyond wage inflation, due to cost of materials and land rising.

The Central Bank want to ensure that sensible lending practices are in practice, and that people don't borrow more than they can repay.

If anything, the fact that prices are rising so rapidly only underpins the need for the 3.5 times limit. You would need to have supply and demand at a far more balanced point before you could think about removing them.

If they were removed now, prices would jump even higher, as demand is outstripping supply, and people would be bidding crazy money.

Hubertj

Villa05 wrote: »

Thanks for posting, we'll worth a read. They say collectively that housing affordability has surpassed 2008 levels. Lots of warning signals flashing but no obvious trigger for a decline

For Ireland credit growth is negative while real house price growth puts us in the top 5, just goes to show the impact of the investment funds on the market.

These investment funds drive up rents to unsustainable levels thereby distorting the price to rent ratio

A very useful metric to establish the health of the Irish property market would be a rent to income metric

Wonder how the 2008 crash effects our overall metrics. Over supply in the regions with undersuppy in the cities, plus inability to deal effectively with long term arrears

What % of the market to funds own? In the latest ESRI report what % of units did funds purchase?

And why focus on 1 metric vs the various metrics in the article?

Are the issues in other countries such as New Zealand as a result of greater government interference in the market such as macro rules, stamp duty etc? Are there common issues across all?

Browney7

tigger123 wrote: »

They could well be holding them so afterwards they can say 'having taken on board the views of all stakeholders, we are content that the lending rules should not be modified'.



The Central Bank want to ensure that sensible lending practices are in practice, and that people don't borrow more than they can repay.

If anything, the fact that prices are rising so rapidly only underpins the need for the 3.5 times limit. You would need to have supply and demand at a far more balanced point before you could think about removing them.

If they were removed now, prices would jump even higher, as demand is outstripping supply, and people would be bidding crazy money.

There was a contributor (Dowling financial mortgage broker I think) on morning Ireland this a.m. outlining why he believes they need to change. He seemed to think supply was going to come quickly which isn't borne out in other opinions (both new builds and existing properties being put up for sale).

Main substance of his point was that limits should be based on what the repayment is from net income and that gross salary multiple is too crude a measure. With a low fixed interest rate of 3% for 20 years (he mentioned finance Ireland), someone with a mortgage of 175k (50k X 3.5) would have repayments of 750ish (didn't give specifics) and that 750 would be only 25% of net income. He was advocating that if 35% of net income was the repayment then that person would a 250k mortgage.

A carrot for the industry may be that if they can deliver 30000 new build homes they'll get their rule change but i personally wouldn't be in favour of changes to the macro Prudential rules given the dearth of supply at present and would just cause chaos to prices at the lower levels of the property market.

yagan

Ray Palmer wrote: »

I get the feeling Irish people think the property market will return to bygone times where most people could buy a home. We had the highest homeownership in the world in 80s/90s. That was always going to change as we became more integrated in global economics. This was obviously going to effect property.

High rates of homeownership were a direct response of domestic policy, and the pendulum seems to be swinging back towards policies that favour it.

At the same time that Ireland had trade wars with the UK and its empire our trade with the rest of the world grew. At independence 90% of Irish exports went to Britain, now that figure fluctuates in single digits.

All through the growth of our global economy home ownership rates grew via government housing policies, so globalisation is simply not the issue.

JDD

Browney7 wrote: »

There was a contributor (Dowling financial mortgage broker I think) on morning Ireland this a.m. outlining why he believes they need to change. He seemed to think supply was going to come quickly which isn't borne out in other opinions (both new builds and existing properties being put up for sale).

Main substance of his point was that limits should be based on what the repayment is from net income and that gross salary multiple is too crude a measure. With a low fixed interest rate of 3% for 20 years (he mentioned finance Ireland), someone with a mortgage of 175k (50k X 3.5) would have repayments of 750ish (didn't give specifics) and that 750 would be only 25% of net income. He was advocating that if 35% of net income was the repayment then that person would a 250k mortgage.

A carrot for the industry may be that if they can deliver 30000 new build homes they'll get their rule change but i personally wouldn't be in favour of changes to the macro Prudential rules given the death of supply at present and would just cause chaos to prices at the lower levels of the property market.

The problem with the percentage of net income is that a couple, applying for a mortgage before they have children could probably afford a mortgage more than 3.5 times their net income. However, once children and childcare come along that mortgage payment becomes more like 50/60% of net income, and wage increases don't come near to offsetting that. Throw in a redundancy or a cut in hours for one partner during a recession and you have a couple who are coming to the bank looking for an adjusted repayment plan. Exactly what the bank want to avoid.

If you do have a couple that already have kids and are unlikely to have large additional outgoings in the future, and can afford to repay more than the 3.5 times salary mortgage, then this is where the exemption comes in. But there isn't that many couples out there, hence the limit on exemptions.

And of course a mortgage broker wants the rules to change. More clients, higher mortgages, more commission for him.

Regarding the carrot, I wouldn't be in favour. It would artificially reduce demand, while house hunters sat on their deposit anticipating the rule change coming and the ability to borrow more. We need to avoid those artificial peaks and troughs.

genericgoon

Every time the Government signals a new demand side intervention, the primary beneficiaries are speculative investors/developers since there is no cost to sitting on their hands for the expected site/house price increases. If the Central bank were to signal a loosening of rules, same result so would be surprised if the current comments from vested interests did not prompt a CB slap down of those expectations prior to these public consultations.

JDD

yagan wrote: »

High rates of homeownership were a direct response of domestic policy, and the pendulum seems to be swinging back towards policies that favour it.

At the same time that Ireland had trade wars with the UK and its empire our trade with the rest of the world grew. At independence 90% of Irish exports went to Britain, now that figure fluctuates in single digits.

All through the growth of our global economy home ownership rates grew via government housing policies, so globalisation is simply not the issue.

Somebody give me an example of a wealthy country where there is low home ownership levels. How do they provide security to renters? How do they deal with retirees, who don't have the income to pay market rent - but would have a mortgage paid off by retirement? What about payment for nursing homes etc, if they are not to be paid out of the equity owned in a house?

If your government policy is not to positively act in favour of home ownership, they'd want to be making a lot of changes elsewhere to protect the large proportion of the population that the government will now accept will rent forever.

I might be wrong here, but my impression of a country with lower home ownership levels is a country where buildings are owned and rented by the very few super wealthy. And that means your Joe Soap like you or me are not in a position to leave a significant asset to our children, thus redistributing wealth across a much large swathe of the population than just a small number of landlords. There's no way, if you were renting for your whole life, that you would be able to invest additional money, on top of rent, that would give you an asset the equivalent value of a home at retirement.

cnocbui

You could start with Germany, Switzerland, Austria. Ironically, it's the poorer countries that have the higher home ownership.

growleaves

cnocbui wrote: »

I'd be concerned about buying property in NZ at current prices.



That's from a Bloomberg article about global housing bubbles: https://www.bloomberg.com/news/articles/2021-06-15/world-s-most-bubbly-housing-markets-flash-2008-style-warnings

As I would have suspected, Irish house price increases are very modest compared to the trend.

The mean for Real Price Growth is 6.35%. Ireland is 8.7%

Only the US and New Zealand have broken 10%. Surely 8-9% is high?

yagan

JDD wrote: »

Somebody give me an example of a wealthy country where there is low home ownership levels. .

Denmark and Germany are two examples that spring to mind. But both have housing policies that strongly protect renters via caps and leases for longer than in Ireland which simply doesn't draw in rent farmers. Compared to Ireland and other open door markets they simply aren't as attractive for international yield seeking funds.

We've tended to favour the policies of home ownership but until recently we had never been a target for rent yield farmers, which is why our government is painfully slow to react as they are wedded to a totemic belief that interfering in FDI in any way will be negative, even though most multinationals in Ireland have cited that housing cost for their staff as a negative.

Those who own property of course are happy for the hot money to push up their equity.

Hubertj

yagan wrote: »

Denmark and Germany are two examples that spring to mind. But both have housing policies that strongly protect renters via caps and leases for longer than in Ireland which simply doesn't draw in rent farmers. Compared to Ireland and other open door markets they simply aren't as attractive for international yield seeking funds.

We've tended to favour the policies of home ownership but until recently we had never been a target for rent yield farmers, which is why our government is painfully slow to react as they are wedded to a totemic belief that interfering in FDI in any way will be negative, even though most multinationals in Ireland have cited that housing cost for their staff as a negative.

Those who own property of course are happy for the hot money to push up their equity.

I would suggest housing policy in Germany and Denmark is more stable which provides security for both tenant and landlord. Caps etc on 1 side to protect tenants but also certainty for landlords around regs, tax, recourse for arrears etc.

MacronvFrugals

The SCSI now reiterating the ESRI's call for an increase in capital spending for housing

The new president of the Society of Chartered Surveyors Ireland (SCSI) has called on the Government to follow through on the ESRI’s recommendation to borrow an additional €4 billion-€7 billion a year to invest in housing.

“The SCSI has been calling for a major government-funded housebuilding programme involving both the private and public sectors for some time. Even at the pre-Covid rate of output of around 20,000 units, we forecast that supply and demand would not be in equilibrium until 2031. So unless drastic action is taken, tens of thousands of people hoping to buy an affordable home, will face another decade of despair,” he said

.


https://www.irishtimes.com/life-and-style/homes-and-property/state-urged-to-borrow-up-to-7bn-more-a-year-for-housing-1.4593042?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Flife-and-style%2Fhomes-and-property%2Fstate-urged-to-borrow-up-to-7bn-more-a-year-for-housing-1.4593042

Villa05

Hubertj wrote:

What % of the market to funds own? In the latest ESRI report what % of units did funds purchase?

The most recent set of new build figures suggest that only a third Were made available for sale to the general public. Gov, ahb and investment funds purchased the remainder. Recent developments would suggest that invest funds are the dominant player amongst them

Hubertj wrote:

And why focus on 1 metric vs the various metrics in the article?

I cited 3 and suggested another that might be more relevant to the Irish market (rent to income)

Top 20% can probably afford to buy

Maybe 60% are stuck renting at considerably higher cost than buying

The state is supporting the bottom 20% through rent supports that drive up rents for the middle 60% and outbidding the top 20% through purchasing or long term leasing pushing that cohort further away from their place of work

A survey with 5 metrics can't capture all this market behaviour that is far from sustainable

Hubertj wrote:

Are the issues in other countries such as New Zealand as a result of greater government interference in the market such as macro rules, stamp duty etc? Are there common issues across all?

There are other posters better placed to comment on New Zealand, but they survey suggested numerous bubble dangers including affordability at 2008 levels