"average Dublin house prices should fall to ‘the €300,000 mark" according to Many Lou McD.

hometruths

https://www.boards.ie/discussion/comment/121603402#Comment_121603402

Hmmm. That's also not entirely true.

If you owe 200k on your 400k house and wish to trade up to a 600k house, you've got to find 200k from a combination of increased mortgage and/or savings.

But if house prices drop 30% your position becomes:

You owe 200k on your 280k house - yes you've taken a hit on the notional equity in your previously valued 400k house, but the price of the 600k house you wish to trade up to has also taken a hit. It now costs 420k.

So you've gone from needing 200k to needing 140k in order to trade up to exactly the same house. Quite a significant difference. 30% less oddly enough.

It's the relative cost differential between the two houses that matters to those trading up, not simply the value of the house you're selling in order to trade up.

hometruths

https://www.boards.ie/discussion/comment/121603684#Comment_121603684

We've both made a claim. Yours being the majority of people would be in negative equity if prices fell 30%, mine being it would a tiny minority.

To back up my claim, I've provided a link to the CSO with data on home ownership, including figures and demographics on the number of residential properties owned with and without mortgages, as well as rentals.

You seem to be unaware how that data relates to our claims, hence why I asked if you had any source informing your belief, or was it just your feeling.

I'd agree it's been cleared up.

Clo-Clo

https://www.boards.ie/discussion/comment/121603753#Comment_121603753

Im aware of what the data was and it has nothing to do with negative equity.

I said the poll was wrong and only a vote would give the full story, with people unwilling to go into negative equity, anyone thinking they would be happy is deluded.

You claimed it was a tiny percentage, yet just looking at the charts it says over 500,000 homes have a mortgage/loan. Not a tiny percentage. quick google says nearly 570k mortgages in Ireland

Tiny percentage? if you can clarify how you know of those mortgages what is the tiny percentage

hometruths

https://www.boards.ie/discussion/comment/121603834#Comment_121603834

570k people have outstanding mortgages in Ireland. But nearly 680,000 people own their properties outright.

I presume you'll accept only those with outstanding mortgages are at risk of negative equity if prices fell 30%?

So those with outstanding mortgages are not even in the majority of property owners, let alone the majority of the adult population. Given that fact, it's hard to fathom how the majority could end up in negative equity.

Of those outstanding mortgages, it's only those with the least equity at today's prices that are at the most risk of negative equity. It's not even close to 570k mortgage holders.

Broadly speaking you'd have to currently have less than 30% equity at todays prices to be at risk of negative equity from a 30% fall. Recent FTBers will have started their mortgages with at least 10% equity, trader uppers at least 20%.

When were prices last 30% below today's values? I'm not sure, but for arguments sake lets say 5 years ago.

So realistically it's largely only those FTBers who have bought in the last 5 years that are risk of negative equity in the event of a 30% crash.

And realistically whilst you would expect 100% of those FTBers who bought in 2023 to be in negative equity, it's unlikely to be anything like 100% of those who bought in 2019.

There's been lass than 100k FTB mortgages drawn down since 2019. So a rough guess of the kind of number at risk would be 50k. Less than 10% of existing mortgage holders. A minority. Less than 5% of existing property owners. A small minority. Less than 1% of the population. A tiny minority.

Claiming that the majority of people would be in negative equity in the event of a 30% crash is absurd.

Clo-Clo

https://www.boards.ie/discussion/comment/121604053#Comment_121604053

Of the people who are without mortgages over 350k of those properties are with 65+ age group. Most of whom you would expect are retired. On the charts you provided. Another near 100k of those with the 60+. Then over 50k with the 50-59 age group.

So of the houses with no mortgage 500k+ of those are sitting with people in retirement or close to retirement.

Most will see that property as their nest egg and what they can pass onto children after working for a significant period of their life. Good luck telling them you want to cut 30% of the price off the house after they worked before, during and after the Celtic tiger,

So what you are left with is 100k houses of people who own their house without a mortgage. Which you seem to think they don't care about the value of the property. Good luck with that.

So let's look at the mortgage properties

So in age group from 25-49 you have 430k house with mortgages.

Now you have somehow come to the assumption that only people buying in the last 5 years would end up in negative equity and Im struggling to see how you would come to that.

Also you seem to have decided that only FTB's have bought houses in the last 5 years, again another assumption. This seems to disregards people who naturally will sell and move. Also disregarding top up mortgages etc.

So as I posted on this thread already, the people who bought apartments/small house during the boom and ended up in negative equity, finally got out of it and have managed to upgrade the house after outgrowing it. You think they are not worthy of discussion and should end back in negative equity?

From what I can see, you made a statement without the information. Now have tried to twist the information to backup the statement.

"absurd" 😂

Bang away anyway.

hometruths

https://www.boards.ie/discussion/comment/121604262#Comment_121604262

Now you have somehow come to the assumption that only people buying in the last 5 years would end up in negative equity and Im struggling to see how you would come to that.

I have at least tried to explain the logic behind my assumption.

I'm equally struggling to see how you're coming to the conclusion that the majority of people would end up in negative equity. Are you willing to explain the logic behind your assumption?

suvigirl

This argument is a bit weird, I bought a house yesterday and if it drops 30% in value, I won't be in negative equity. And I do have a mortgage

HerrKuehn

I don't necessarily have an issue personally with house prices dropping 30% even, but I bought a property over 10 years ago and it wouldn't be my main source of wealth, I have other investments. For others though it would be maybe the only asset they own. I think given the generally selfish mentality in Ireland, the "can't someone else pay for it?" type mentality, I would be very surprised if people would be OK with properties dropping by so much. You just need to look at the water charges protests or say the opinion polls when it comes to a UI, the opinion changes when it comes to actually paying.

hometruths

https://www.boards.ie/discussion/comment/121604926#Comment_121604926

My point exactly.

GreeBo

https://www.boards.ie/discussion/comment/121604926#Comment_121604926

I'm not sure what point you are trying to make here tbh.

GreeBo

https://www.boards.ie/discussion/comment/121604320#Comment_121604320

Does your assumption also assume that no one remortgages their house for any reason?

hometruths

https://www.boards.ie/discussion/comment/121605411#Comment_121605411

Assuming the house is the only asset an individual owns, and they are not intending to sell it in the short term in order to downsize to cheaper property or to rent, and assuming they're not in negative equity, what are the meaningful disadvantages to a 30% fall in house prices to that individual?

Apart from getting less of a kick out of their notional paper wealth, I'm struggling to see why it is such a disaster for that individual?

hometruths

https://www.boards.ie/discussion/comment/121605660#Comment_121605660

My assumption assumes the majority of people are not remortgaging their house.

Common sense and CB lending limits will tell you that the only people remortgaging their house are by definition those least at risk of negative equity from a 30% fall in prices.

DataDude

https://www.boards.ie/discussion/comment/121605666#Comment_121605666

You are 100% right in theory. There are some small benefits to a lower LTV with mortgages but nothing life changing.

That said there is something about human nature which grates on people if they buy a new house for say €600k and a year later someone moves in next door for €400k even though it doesn’t directly change their circumstance. Rightly or wrongly I see it all the time with my friend group who have all bought in last 3 years. Hated high prices and cursed them when looking. But second they’re in:

‘I just really hope I didn’t buy at the very top. I’ll be sick if these are going on the cheap in a few years’.

You’d imagine anyone who bought pre 2017 (other than 05-07) won’t be too fussed.

HerrKuehn

https://www.boards.ie/discussion/comment/121605666#Comment_121605666

I don't necessarily disagree, but most people don't think like that. I don't think there is great social cohesion in Ireland, it isn't so much "ask not what your country can do for you, but what you can do for your country", it is more like "I wanna hear more about what the country can do for me". This goes from top to bottom. The water charges in particular was very instructive for me, many of the people protesting would be paying little if any additional taxes. It is all about me, me, me and someone else should be paying for everything. So good luck getting a bit of altruistic behavior, I am doubtful.

o1s1n

https://www.boards.ie/discussion/comment/121604926#Comment_121604926

Is your mortgage 70% LTV or less?

Lots of folks on 80% or 90% LTV rates who'd go into negative equity if prices dropped by 30%.

You'd imagine they wouldn't be selling any time soon though so it shouldn't impact them in reality. It might though if they decide to upsize in ten years.

mariaalice

It might be brought about by accident, first time buyer are going to be nervous paying today prices if within 5 years the value of there home goes down by 40%, for those with no mortgages or negliabel mortgages if avarage house prices drop to 300k.

dasdog

https://www.boards.ie/discussion/comment/121605729#Comment_121605729

I noticed the change around 2003/4 - a kind of latent Thatcherism. Enormous prosperity for all of its many benefits brings its own problems. And there was always a cohort of of the population that wanted things without putting in any effort and they will take advantage.

The only time the country is "together" is during international sporting events.

Sad really but better than mass unemployment and actual barefoot poverty.

HerrKuehn

https://www.boards.ie/discussion/comment/121605846#Comment_121605846

I don't think it is anything to do with Thatcherism. It isn't just at the top, it is just as prevalent if not more so at the bottom. You can even see it in the disregard for rules generally, that isn't a way to build a cohesive society, it is all about me and f**k other people. Even small things, like near where I live there is a park with playing pitches (no dogs off leads) and another area of the park specifically designated as a dog park. Do you think that the majority of people keep their dogs on the lead unless they are in the dog park area? 🤣 Of course they don't, it's Ireland, they think of themselves and couldn't give a f**k about their dogs **** on the pitches the kids play GAA and football on!

DataDude

https://www.boards.ie/discussion/comment/121605801#Comment_121605801

Anyone with the brains to be a potential first time buyer will be aware that a 40% drop in house prices over the next 5 years has almost no chance of occurring and is merely a throwaway comment hoping to attract some votes.

10% increase in wages for the entire public sector on the way over next two years. Private sector will be slightly lower but similar...

hometruths

https://www.boards.ie/discussion/comment/121605717#Comment_121605717

Therein lies the problem, it's the pull up the ladder behind you mentality.

You cannot have a functioning market without accepting the reality that hindsight will show some people have inevitably bought at the top of the market.

Sure that's not ideal for those individuals, but that's how functioning markets work, and in the grand scheme of things these are a relatively small number of people. That's what I meant by my earlier point that the tail is wagging the dog.

The problems we have now are largely driven by the fact that government policy has been to protect and endorse the pulling up the ladder mentality.

And that's a vicious cycle. The longer that government policy tries to ensure that nobody has to suffer the consequences of buying at the top of the market, the more out of reach houses become for those that are not yet on the ladder.

The only solution to this is more assistance for those not yet on the ladder, which pushes prices higher, and this of course intensifies two problems - the need to pull the ladder up further, whilst simultaneously requiring more assistance for others to get onto the ladder. And so on and so forth. The longer it goes on the worse it gets and the harder it is to stop.

We will never sort the problems in the housing market until there is the political will to reverse this thinking and accept that it is not governments job to protect private buyers from the vicissitudes of market cycles.

And unfortunately the only way we'll get that political will is if there is a wider understanding from the general public that the entire country is being crippled in order to look after a relatively small number of individuals.

Judging by a lot on the posts on this thread we're a long way from that understanding!

Clo-Clo

https://www.boards.ie/discussion/comment/121604320#Comment_121604320

You made a statement and then skewed a census to try backing it up. Totally disregarding people who have switched homes/topped up mortgages etc which happens daily in Ireland.

Anyway I will agree to disagree because it's pointless going around it.

MegamanBoo

https://www.boards.ie/discussion/comment/121605729#Comment_121605729

I wouldn't necessarily think of it as an altruistic outlook.

Personally I think it's in my interests if house prices drop, even as a homeowner.

I think it benefits me, my kids, my family a) if they can afford homes, b) and if we don't have staff shortages in essential services, c) we don't have a further housing fueled rise in social disorder - see riots, arson, roadblocks.

Plus houses prices should drop along with construction costs. A lot of homeowners will be forced in the next few years to retrofit their homes. It didn't get much attention in the media but we've recently signed up to ban fossil fuels for heating in 2040. Upgrading to an heat-pump ready home will be hugely expensive for most people as things stand, I'd guesstimate 100k on average (including the nonsense one-stop-shop grants).

suvigirl

https://www.boards.ie/discussion/comment/121605764#Comment_121605764

Yes it is. But like you said negative equity doesn't really matter until you're selling. And most people wouldn't be selling for a good few years after buying. I don't think

HerrKuehn

https://www.boards.ie/discussion/comment/121606006#Comment_121606006

People will view it in different ways, some people don't have kids, many people are selfish, some will be looking to sell up to retire etc. I am not necessarily opposed to it. But I think we could sort out the essential workers using a proportion of the current part V. It seems like an easy win for me.

Clo-Clo

https://www.boards.ie/discussion/comment/121606075#Comment_121606075

The likes of the following should be used for essential workers

https://www.independent.ie/business/irish/lda-to-put-621-cost-rental-apartments-on-offer-in-dublin-and-kildare-area-from-next-week/a1588773054.html?fbclid=IwAR3udM78T4N8y8-bZQuajaNRBMJmQdgjwNKVbCXClRCpYjzmDJr8MvwlNyY

DataDude

https://www.boards.ie/discussion/comment/121605950#Comment_121605950

I agree completely with all of your sentiments.

Thats said, we can’t be oblivious to the wider world and the reality that Ireland remains a relatively cheap place to buy property when you consider other first world countries. What capital city that you’d actually want to live in has 3 bed semis at €300k? Unlike last time where we were the basket case, this time we look affordable relative to peer countries (credit to CBI limits for keeping us in check while others lost their mind).

I still believe the least painful way out of this is a continuation of what we have had over the last 18 months:

• very low house price growth (slightly negative would be preferable).

• strong wage growth outpacing the above which means houses are getting cheaper year on year (they are currently)

• continuation of the strong increases in building and associated increase in numbers of first time buyers.

• home ownership rates starting to stabilise/marginally increase

An all out collapse down to €300k would cause exactly what we saw in 2009 and led us to where are now. No new building. Pulling of financing. Only cash buyers can capitalise. Home ownership rates plummet. Mass emigration.

The idea house price drop 40% and we all live happily ever after with 35k+ new builds continuing to go up is fantasy land.

hometruths

https://www.boards.ie/discussion/comment/121606078#Comment_121606078

To be honest haven't spent a lot of time comparing Dublin to other countries, but I don't doubt that it is expensive everywhere.

And in my opinion it's not so much the price of houses I have the biggest problem with, it's the fact that the market is not functioning properly, and much of this is a result of misguided government policy, the root of which are reasons set out above. And its having knock on effects across the board.

Those policies have pushed prices higher than they otherwise would be, irrespective of international comparisons.

I suspect that if the policies were reversed we wouldn't see a return to an average Dublin price to 300k, but I do think we'd see a fall in prices without 2009 style armageddon.

I'd agree with your least painful ways out, but above all what I think our way out of this is increasing turnover in the market, restarting the musical chairs you've probably heard me bang on about before. The market is currently clogged up like a blocked pipe. We need to get it flowing again to solve the problem.

I am not holding my breath though.

Blut2

https://www.boards.ie/discussion/comment/121603108#Comment_121603108

"I don't doubt the poll but what I am pointing out 2 things the poll doesn't indicate the drop people are prepared to accept"

The poll literally points out exactly a defined number people are in favour of, a drop to a €300k average price.

Again, not being harsh, but you either didn't read the article at all or clearly didn't understand the not very complex words in it.

37% of voters being against something in a democracy is the opposite of huge. We haven't had a government in Ireland in 100 years that had the support of more than 55% of the public. 63% of voters being in favour of a policy is as clear a majority as you're going to get in a democracy.

GSBellew

https://www.boards.ie/discussion/comment/121603444#Comment_121603444

The poster I was responding to was saying that landlords should rent below mortgage costs because they have the equity in the property at the end and it should be viewed as a long term investment, but the sums do not add up, yes there will be equity and a property at the end of it all, but it will have cost the landlord a substantial amount to attain that equity, there are alternative long term investments that would see a much greater potential return with less risk. If this posters argument stacked up why rent, surely buy the property outright and have the equity yourself, not so easy to do though is it, so why expect a landlord to do the hard bit only to loose money on the deal?

I'm illustrating that it is a nonsensical notion, a landlord is a landlord to make money and receive a return on investment, they are not a housing charity.

I imagine there are more enjoyable ways to loose money over a thirty year period.