100% Mortgage Anyone

bill_ashmount · 19-07-2005 3:32pm

MorningStar wrote:

If you are really worried about prices check the cost of construction against the cost of the house in the market. Generally it's not that bad.

What is that ratio out of interest? Any examples?
Cheers

Imposter · 19-07-2005 3:44pm

MorningStar wrote:

What historical concerns?......The Irish property market is actually pretty unique..........A large young house buying population with a previous generation at 80-90% home ownership..........We are also the highest home ownership in the world. We are pretty unique.......Home ownsership could easily move to a model where a larger portion of the population can't afford a house. like in other countries.

If it's so unique then you obviously don't know this. It could also crash due to "the largest grouping of population at one place for the whole country" or even "Poor transport links" or if we didn't have "full employment".

Also the fact that I assume (does anyone know definite figures on this?) there are more rental properties in the market now (% wise) than there was in previous generations means that investors are almost definitely responsible, at least in part, for the sharp rise in prices.

I think your reasons for saying that a crash won't happen are just as disingenuous as the ones you are trying to ridicule.

MorningStar · 19-07-2005 3:48pm

lomb wrote:

Anything like large nice houses(large semis with good amenity like nice schools near by, its the old southeast dublin again like blackrock, D6,D14,D4 etc etc, rakes of nice schools, shops etc. i reakon percentage wise they will increase disproportionately. many have 40-50 ft back gardens. of course most of these are already very dear starting at about 550k, so my advice is slightly late....

OK so you are a Southsider

You might want to look around the whole city and see what the property stock is like. There are actually al lot of ex-corpo houses that have gardens well over 100ft long. There are nice schools in other parts of the city too. Either way the current houses are under a certain amount of threat due to the desire to increase population density with corner sites being filled in. The desire for nice large houses as you say will actually drop off in the next 20 years as family sizes diminish and marriages break up. The large houses will end up split up unless in a particular good area. Look at what happened to all the georgian houses in the poorer northside areas versus st. Stephens Green.

lomb wrote:

All my advice is a little late but with the demographic increase the shortage of prime propeties will intensify...

You are like 10 years behind the fact. You are now talking about the higher end of the market. It was always the higher end of the market so it didn't really matter that it was cheaper than now it was always the more expensive property. The demographic isn't increasing it's changing the population is increasing. The demographic of family units I grew up with is already gone and the next change is divorce as it becomes part of our society and the increase in single people as people don't marry.

MorningStar · 19-07-2005 4:01pm

bill_ashmount wrote:

What is that ratio out of interest? Any examples?
Cheers

It depends on the house. The keys is take the value of the land out of the calculation. I can't remember the basic cost of constructon per sq foot but that is a guide if you can find it.

imposter wrote:

I think your reasons for saying that a crash won't happen are just as disingenuous as the ones you are trying to ridicule.

I have not riducled anyone who has given opinion with reason. People who call me and what I do "scum" deserves ridicule IMHO. I have repeatedly asked you to give reason and logic to your opinion yet you ignored it. I have stated reason and logic on this thread and explained my opinion. You have just stated opinion which either means you have no facts, logic but think you know like stuff. Go randomly highlight something in your reply now. I do know it's unique but you have a point the full employment would effect the market. State one thing though why is it a bubble? You have been unable to do this thus far or even explain what gives your opinion any weight.

ionapaul · 19-07-2005 4:28pm

MorningStar wrote:

Home ownsership could easily move to a model where a larger portion of the population can't afford a house. like in other countries. This is not new economics it's very old.

Old circa Ireland 1847? 'A larger portion of the population can't afford a home'...the dream of all buy-to-let investors, a captive market! I believe this will not be allowed to happen, due to government intervention, for precisely the historical reasons we discussed earlier - Irish mania for home ownership following centuries of enforced tenant status. Any government promising to help young families buy their own home would crush its opposition at the voting booths, don't ya think?

Any number of plausible reasons can be given why there may or may not be a bubble or a crash, just like in the run-up to the dotcom crash. I bought IONA at $54 and sold at $77 many moons ago, and I fully believed this was a fair valuation of the company at the time, as did most who bought or sold then! Any bubble will only be apparent in hindsight, so maybe we will just have to agree to disagree - as you say, no-one can prove that there is a bubble, just like no-one can disprove it, it is all speculation at this stage.

Imposter · 19-07-2005 6:28pm

MorningStar wrote:

I have not riducled anyone who has given opinion with reason. People who call me and what I do "scum" deserves ridicule IMHO.

I never said landlords were scum. I don't agree with those who did say it. Some landlords are assholes but that cannot be applied to all. Same goed for tenants.

I have repeatedly asked you to give reason and logic to your opinion yet you ignored it. I have stated reason and logic on this thread and explained my opinion.

I've ignored nothing. Once is enough to state things. Imo property is hugely overpriced. Imo (this one is probably proveable but getting the figures is the hard part) investors have created a false market, by hyping up the market and the 'getting on the ladder' concept. Imo a slight change in interest rates or in the employment situation in ireland or many other things could easily trigger a downswing.

You have continuously repeated the same thing. Using historical reasons, something some less than independent *expert* said, or your opinion because you've been in the business forever (we're talking now, not forever), is hardly going to be enough to convince anyone who believes that house prices cannot rise forever and/or 100% mortgages are a good idea.

You have also given your opinion on what the government should do to protect *your* interests. So forgive me if I don't agree with you!

You have just stated opinion which either means you have no facts

What facts have you stated? You've said that property prices have always risen. You've stated that at worst prices will even out. When someone brought up the british and japanese property crashes you stated that the irish situation is unique! It may be unique but there's nothing to say that the market can't suffer a downturn in the *facts* you've submitted.

State one thing though why is it a bubble? You have been unable to do this thus far or even explain what gives your opinion any weight.

I don't expect my opinion to be given any weight. It is my opinion. As to why I think there's a bubble, I think that house prices are becoming beyond the reach of a couple with reasonable jobs in the areas in which they work. By reasonable jobs I mean things like teachers, guards, state workers and many other middle class professions. I think people will begin to realise that they cannot commute 4 hours per day and expect to have a decent standard of living. These groups were never priced out of the market before.

A slight rise in interest rates would mean a serious amount of people who cannot afford their mortgages. The same goes for a downturn in the Irish economy (maybe that will grow forever too!). So many things can trigger a downturn and the market is already inaccessible to a large number who would like to be in that market and historically could/would have been. That's why I think we're in a bubble. The SSIA's might sustain that bubble for the next 2 years too but after that I cannot see how the market can continue to rise.

Thomond Pk · 19-07-2005 8:59pm

Imposter wrote:

A slight rise in interest rates would mean a serious amount of people who cannot afford their mortgages.

Hammer Nail Head

It is all about the ability to repay over the first 5 years on a 20 year mortgage or 7.5 years on a 30 year mortgage.

The function of the purchaser putting down a deposit or equity is that if the going gets rough the value of the asset will always be higher than debt owed. If interest rates rise and the borrower cannot afford the increased rates they can lengthen the term of the loan or allow the interest to accumulate up to the point of the value of the house minus disposal costs of agents and legal fees.

If a purchaser starts with no safety net then both they and the lender are engaging in poor risk management practice. To rely on capital appreciation alone as a safety net is just not prudent as if interest rates rise house prices will level off to negligible growth rates and the purchaser has no equity to fall back on.

professore · 19-07-2005 10:30pm

MorningStar wrote:

Actually rent is payment for a service it doesn't really mater what your landlord does with the money he gets from the risk he is taking.

Where did 2 years come into it?

I think more radical approach to housing needs to be made. The government seem to be parralised between the current homeowners, FTB and the building industry. The FTB are the easiest to ignore because they don't use/have political sway. You need something that doesn't devalue current owners, promotes building and provide affordable housing to FTB. I think the best way is to give incentives to retired people to move out to purpose built intergrated communities. This will get the property stock moving about and hopefully better utalised. THere are a lot of largish 3-5 bed houses near me with only 1 and 2 people living in them. A lot of these people could do with a cash bonus for pensions. The incentives could include a policy to sell to FTB or if too expensive a FTB has to be in the chain.

I really think this a plan that should be considered but I don't know how to get TDs behind it.

What's wrong with affordable apartment blocks like on the Continent? I lived in Antwerp where you could buy a 3-bed apartment with more square footage than a small 3-bed semi in a 9 story block for €50k. Of course rent was €300 p.m. with small state-controlled increases so the pressure to buy was non-existant.

professore · 19-07-2005 10:56pm

CiaranC wrote:

This may be true in your case, in which case you were clever to take the money and run (even though you are giving it back piecemeal now), but for two college graduates, for example, an apartment could be sold on at the same price it was bought at, or even slightly less while their increased earning power would allow them to take out a bigger mortgage for a larger home.

IF they don't have kids - Try a. your mortgage x 1.5 for childcare for 2 kids or b. lose one income because one partner stays at home PLUS 1 x your mortgage for other costs associated with kids. Now see if your theory still applies.

Thomond Pk · 19-07-2005 10:58pm

The Belgian and French property systems are very different with increases being generated by indexation vs open market rental value which is more difficult to regulate from a government point of view.

Allowing 100% mortages is wilfull un-regulation

MorningStar · 20-07-2005 9:35am

Imposter wrote:

I never said landlords were scum. I don't agree with those who did say it. Some landlords are assholes but that cannot be applied to all. Same goed for tenants.

I only ridiculed one view from one person who called investors and landlord scum. He obviously has a republican view too.

Imposter wrote:

I've ignored nothing. Once is enough to state things. Imo property is hugely overpriced. Imo (this one is probably proveable but getting the figures is the hard part) investors have created a false market, by hyping up the market and the 'getting on the ladder' concept. Imo a slight change in interest rates or in the employment situation in ireland or many other things could easily trigger a downswing.

I do have a problem with this view because nobody who has stated it has explained how they know the investors have have pushed up the price. You can't say the investor have done anything without it being speculation. As you don't live in the country and are probably not in the irish property market how do you know? It's a valid question and I have many to say how the know investors have created a bubble. I think it is a particularly wild statement becasue it ignores what a varied bunch investors are. Investors buy house add value through improvemnet and sell on so are these investors to blame? THere are investors who buy land and then build property and sell it how are these causing a problem and not helping? Landlords who are renting out the parents house to provide care for the parent, are they to blame? THe getting on the ladder concept is not a result of the irish property market it is well established principle applied to all countries. It's a rule like supply and demand. There are a number of things that coulld stop increases, that is not a crash. A crash and a stop in increases are not the same there has never ever been a crash without a cause. An intrest rise has never caused a crash in the property market, it has destabilised an economy but that is such a massive extrteme it is really unlikely and property prices would not be the concern. WE are also very well protected by the euro intrest rates. For them to go up basically France and Germany would need to start making a lot of money.

Imposter wrote:

You have continuously repeated the same thing. Using historical reasons, something some less than independent *expert* said, or your opinion because you've been in the business forever (we're talking now, not forever), is hardly going to be enough to convince anyone who believes that house prices cannot rise forever and/or 100% mortgages are a good idea.

I suggest you read what I have posted again. I have posted up a few figures. I have used historical logic because there is nothing new under the sun. I have spoken very specifically about what is happening now in the past and in the future( based on similar events around the worlsd). What is your theory based on? Both views can be valid I just want to know what your views are based on.House prices will rise forever it's just a matter of time to deny this is to deny gravity. It might not have an effect on day to day life so don't mix up that with the current reality. I have never heard anybody actually say they belive house prices will go up forever in the current market. Some people think 100% mortgages are a good thing, I don't and think they are a bigger threat than investors.
You ignored a few things I put to you. You claimed the quality of life here has gotten worse since the 80's yet when challanged on this you just ignored it. It's a bit hard to trust your opinion when you got something so wrong and then ignored it when it's pointed out. I guess you will probably ignore it again

ionapaul wrote:

Old circa Ireland 1847?

In the extreme yes but what I am really saying is that the high home ownership can't be sustained more so than the price. In reality people didn't actually buy their property in the open market for a market value. The local councils housed people for free and next to free they later gave them the right to buy at well below market price. In other countries people don't own their houses. The nearist country to us in home ownership has a dwindling population the next is 14% below. Ive already posted this but here goes again as it is really relevant to how the Irish market is skewed.
http://www.nationmaster.com/graph-T/peo_hom_own
If other economies don't have such high ownership I think it makes sense as we catch up with other economies and nations we will end up with less home owners.
Some have said prices can't go up because the people in good jobs like nurse, guards etc... can't afford that is a problem. The problem with that is tradespeople can be paid more than them so that is why they can't afford a house. A resprectable job doesn't mean you are paid well or give you the right over others. In other countries people rent even with god jobs both due to house prices and reasonable rent. Some of the reason for affordable rent is state control ,planning and big businesses providing rental property. Of course for the planning they had their cities leveled by war and had to house all the homeless people so they were working from a different point to us. That's why antwerp has cheap housing and rent. As mention France and other countries have have different systems to a free market so comparisons are unfair to most contenental countries. THe UK is the closest to us in many ways.

Imposter · 20-07-2005 12:07pm

MorningStar wrote:

I do have a problem with this view because nobody who has stated it has explained how they know the investors have have pushed up the price. You can't say the investor have done anything without it being speculation. As you don't live in the country and are probably not in the irish property market how do you know?

What are the percentage of houses that are owned by people who do not live in them? If it's more than traditional levels then investors own more houses than before (both in percentage and real terms). Therefore more investors in the market means houses are more expensive for everyone. I've not seen figures to say what amount of investors are there so i'd need those before I have the proof you are looking for but from my observations it seems more people own investment properties and i'd assume those that owned them before would still own them.

Quit with that sh1t about me not being in the country. I am not long out of it and I still keep in touch with what goes on there as much if not more than most who live there. Being in the irish property market is hardly a prerequisite to having an opinion either and it alone doesn't give you or anyone expert status on the matter.

THe getting on the ladder concept is not a result of the irish property market it is well established principle applied to all countries. It's a rule like supply and demand.

No it's not. The majority of people in some countries (most of the EU, for example) don't care about owning property. A percentage of the population will but nowhere near the same percentage as in Ireland.

There are a number of things that coulld stop increases, that is not a crash. A crash and a stop in increases are not the same there has never ever been a crash without a cause. An intrest rise has never caused a crash in the property market, it has destabilised an economy but that is such a massive extrteme it is really unlikely and property prices would not be the concern. WE are also very well protected by the euro intrest rates. For them to go up basically France and Germany would need to start making a lot of money.

Prices may level off but do you think most investors will be happy with that or that they will be getting value for their money if that happens? Surely they'd be better putting their money into something that will continue to rise? Do you not think some investors will then start selling if things even off? What do you think will happen then? Is a crash possible?

As for interest rates what you say is true but in 3-5 years this may not be so. Also the fact that Ireland cannot change our interest rates means that inflation is a bigger issue in the short term.

The irish economy is heavily reliant onthe property market at the moment. A slowdown in the number of new houses being bought would damage the economy. While we're playing catch-up at the moment the supply and demand equation for new houses cannot stay as it is forever. Also if something else affects the irish economy then property is likely to be one of the first things affected so the 2 are definitely strongly linked imo. To suggest that any property prices would not be of concern in this situation is a bit naive considering the amount of money tied up in property in ireland.

I suggest you read what I have posted again. I have posted up a few figures. I have used historical logic because there is nothing new under the sun. I have spoken very specifically about what is happening now in the past and in the future( based on similar events around the worlsd).

Sorry for the random highlighting

but I thought the irish market was unique? If so, how is events around the world of any concern? Similarly you seem to ignore the japanese situation.

What is your theory based on? Both views can be valid I just want to know what your views are based on.

Speculation and opinion, much the same as yours.

House prices will rise forever it's just a matter of time to deny this is to deny gravity.

Tell that to the Japanese. The more important question is will house prices continue to outpace inflation forever?

Some people think 100% mortgages are a good thing, I don't and think they are a bigger threat than investors.

I can't see the banks being much more reckless with 100% mortgages. I can see people who are renting at the moment who cannot save a deposit because of this getting a 100% mortgage but somebody living with their parents without a deposit will be unlikely to get one imo. Then again the banks are liable to do anything.

You ignored a few things I put to you. You claimed the quality of life here has gotten worse since the 80's yet when challanged on this you just ignored it. It's a bit hard to trust your opinion when you got something so wrong and then ignored it when it's pointed out. I guess you will probably ignore it again

I ignored it because all I heard was about the unemployed figures for the time when I specifically mentioned that working people could afford a house often on one income. Taxes and everythnig were higher but houses were more affordable than now if you were working. The standard of living was also better in many ways. Things were safer and people were not so concerned with materialistic things as they are now. Some aspects were undoubtedly worse but some were definitely better.

In the extreme yes but what I am really saying is that the high home ownership can't be sustained more so than the price.

If that is the case then rents will have to drop. House prices wouldn't rise as much if at all either. Can you see investors queueing up to buy property in these conditions or where are people going to live?

Some have said prices can't go up because the people in good jobs like nurse, guards etc... can't afford that is a problem. The problem with that is tradespeople can be paid more than them so that is why they can't afford a house. A resprectable job doesn't mean you are paid well or give you the right over others. In other countries people rent even with god jobs both due to house prices and reasonable rent.

Tradespeople get pais a lot more in Ireland than in Europe. In most economies teachers, nurses, guards etc are paid more. Another distortion contained in the irish situation atm.

MorningStar · 20-07-2005 1:09pm

Imposter wrote:

What are the percentage of houses that are owned by people who do not live in them? If it's more than traditional levels then investors own more houses than before (both in percentage and real terms). Therefore more investors in the market means houses are more expensive for everyone. I've not seen figures to say what amount of investors are there so i'd need those before I have the proof you are looking for but from my observations it seems more people own investment properties and i'd assume those that owned them before would still own them.

Well what you are ignoring again is that the traditional irish ownsership market has radically change in the last 90 years. A lot of housing provided by the state to get people out of slums. This housing was sold for next to nothing to give people property under our more socialist beliefs. The market is now a free market. In other words there is no traditional level so we have to level off

Imposter wrote:

Quit with that sh1t about me not being in the country. I am not long out of it and I still keep in touch with what goes on there as much if not more than most who live there.

It is valid to point out that you aren't actually invloved in the market and may not have as much first hand knowledge now. I will leave it at that.

Imposter wrote:

No it's not. The majority of people in some countries (most of the EU, for example) don't care about owning property. A percentage of the population will but nowhere near the same percentage as in Ireland.

It is a well understood rule IF you want to get into the market which is where I was coming from. I agree it is an Irish trait to own your own piece and have always said that. Any country that does not provide restrictive housing and rent control has the same attitude. It is the key to the irish property market. The UK market is good indicator of how Irleand will go so I expect our home ownership will drop to their level.

Imposter wrote:

Prices may level off but do you think most investors will be happy with that or that they will be getting value for their money if that happens? Surely they'd be better putting their money into something that will continue to rise? Do you not think some investors will then start selling if things even off? What do you think will happen then? Is a crash possible?

Part of what I pointed out was investors are not all doing the same things and that they were varied yet you seemed to ignore that. From dealing with property I have met very few people who are trying to make profit in the manner you have described repeately. Most investors are relying on the rent in the future from talking to them. There are muppets using the equity in their homes acting as you said but they really aren't the majority of investors from my direct observations in the market.

Imposter wrote:

As for interest rates what you say is true but in 3-5 years this may not be so. Also the fact that Ireland cannot change our interest rates means that inflation is a bigger issue in the short term.

Regualr inflation and property inflation are pretty different things. Interest rate will not go up in the manner they did in the past with 5% increases due to the stability the euro gives due to size.

Imposter wrote:

The irish economy is heavily reliant onthe property market at the moment. A slowdown in the number of new houses being bought would damage the economy. While we're playing catch-up at the moment the supply and demand equation for new houses cannot stay as it is forever. Also if something else affects the irish economy then property is likely to be one of the first things affected so the 2 are definitely strongly linked imo. To suggest that any property prices would not be of concern in this situation is a bit naive considering the amount of money tied up in property in ireland.

I completely agree that the economy is relying too much on the building industry but that doesn't mean property. If you want a house close to dublin the building industry can't provide it as there is not enough land. there is limited supply of certain things. Housing production can't continue as is I always said that and suggested it should be eased down by better use of existing stock.

Imposter wrote:

Sorry for the random highlighting but I thought the irish market was unique? If so, how is events around the world of any concern? Similarly you seem to ignore the japanese situation.

Every person is unique yet a doctor can perform on them all as he applies knowledge learnt.

I posted up a response with a link to the japanese market you should read it.

Imposter wrote:

Speculation and opinion, much the same as yours.

I try to get my speculation to be based on hard facts and data. Mine is more conclusions drawn from fact so I guess i am not speculating but concluding from fact.

Imposter wrote:

I ignored it because all I heard was about the unemployed figures for the time when I specifically mentioned that working people could afford a house often on one income. Taxes and everythnig were higher but houses were more affordable than now if you were working. The standard of living was also better in many ways. Things were safer and people were not so concerned with materialistic things as they are now. Some aspects were undoubtedly worse but some were definitely better.

Well maybe you should have listened more. People couldn't afford house in the 80's there was a lot of state housing . What age were you then? It's really relevant to how you viewed this time and what was going on then.

Imposter wrote:

If that is the case then rents will have to drop. House prices wouldn't rise as much if at all either. Can you see investors queueing up to buy property in these conditions or where are people going to live?

Big property investing compnaies funded by pension companies come in and buy the property because they have the patience to earn profit from property . People live in the property that is rented out. We are in a big transition as were my grandparents all of whom got corporation housing after renting pretty disgusting housing. Now my parents own the same type of house their parents rented a room in.

Imposter wrote:

Tradespeople get pais a lot more in Ireland than in Europe. In most economies teachers, nurses, guards etc are paid more. Another distortion contained in the irish situation atm.

That is simply not true for the whole of europe and not in the world for sure. A cops salary in the US or the UK are not great wages or public teachers. Many other countries don't give their teachers etc.. such great pensions and bullet proof jobs. A low salary doen't mean they are not rewarded well.

Imposter · 20-07-2005 1:48pm

MorningStar wrote:

Well what you are ignoring again is that the traditional irish ownsership market has radically change in the last 90 years. A lot of housing provided by the state to get people out of slums. This housing was sold for next to nothing to give people property under our more socialist beliefs. The market is now a free market. In other words there is no traditional level so we have to level off

Can it not conceivably go down and then level off?

Any country that does not provide restrictive housing and rent control has the same attitude.

What do you mean by restrictive housing?

Part of what I pointed out was investors are not all doing the same things and that they were varied yet you seemed to ignore that.

How exactly did I ignore it. I've more or less lumped all investors under the "you own the house, but don't live in it category". That covers pretty much all of what you are talknig about. In the case of renting to pay for care it is slightly different but otherwise it's not.

From dealing with property I have met very few people who are trying to make profit in the manner you have described repeately. Most investors are relying on the rent in the future from talking to them. There are muppets using the equity in their homes acting as you said but they really aren't the majority of investors from my direct observations in the market.

Do you mean they are relying on rent over a 30+ year period? Most investors have borrowed to pay for their property so if prices don't rise rent will be their only gains on investment. Factor in having to put extra to pay off borrowings, than the rents received from the property and then the investment doesn't look all that good. Those muppets you speak of are plentiful enough.

Regualr inflation and property inflation are pretty different things. Interest rate will not go up in the manner they did in the past with 5% increases due to the stability the euro gives due to size.

But property prices have to rise faster than regular inflation for investors to make money from a sale. I agree interest rates won't rise by much or very fast.

I completely agree that the economy is relying too much on the building industry but that doesn't mean property. If you want a house close to dublin the building industry can't provide it as there is not enough land. there is limited supply of certain things. Housing production can't continue as is I always said that and suggested it should be eased down by better use of existing stock.

If you want free market principles to aid investors/owners as the prices rise you should expect governemnt intervention to keep the prices high. That in itself is a sure sign that the market is overvalued.

I try to get my speculation to be based on hard facts and data. Mine is more conclusions drawn from fact so I guess i am not speculating but concluding from fact.

Get a dictionary and look up the word speculation and the word fact. Assuming speculation is not what you meant, seeing as your views are based on fact, you are basically just saying you are right and that's it. Seeing as we are talking about the future and about a market you say is unique i'm amazed you know for sure how things will go.

Well maybe you should have listened more. People couldn't afford house in the 80's there was a lot of state housing . What age were you then? It's really relevant to how you viewed this time and what was going on then.

I was rather young then but all of my family (aunts/uncles as well as other neighbours) all managed to buy/build houses then. Most were working off one income and not an overly high income at that. Yes some people in the area got council houses (and cheaply) but many others had their own. Role on 20 years and people in a similar situation cannot even consider buying or building because of the cost.

That is simply not true for the whole of europe and not in the world for sure. A cops salary in the US or the UK are not great wages or public teachers. Many other countries don't give their teachers etc.. such great pensions and bullet proof jobs. A low salary doen't mean they are not rewarded well.

Where are tradespeople earning as much (anywhere in the world) compared to teachers, guards, nurses etc?

The reason I used those professions earlier was that they were some of the better middle class professions of the time we were discussing.

MorningStar · 20-07-2005 4:22pm

Imposter wrote:

Can it not conceivably go down and then level off?

Yes of course but I was talking about home ownership not house prices. It is conceviable but it if talking about house prices that wouldn't be called a crash.

Imposter wrote:

What do you mean by restrictive housing?

I meant rent control and planned social housing. Privately own housing was very controlled in continental Europe as many were aslo based on the french more socialist model.

Imposter wrote:

How exactly did I ignore it. I've more or less lumped all investors under the "you own the house, but don't live in it category". That covers pretty much all of what you are talknig about. In the case of renting to pay for care it is slightly different but otherwise it's not.

You missed the fact that many investors are adding houses to the market and adding value to existing properties. IN other words good for the supply side of housing and not a bad influence on demand.

Imposter wrote:

Do you mean they are relying on rent over a 30+ year period? Most investors have borrowed to pay for their property so if prices don't rise rent will be their only gains on investment. Factor in having to put extra to pay off borrowings, than the rents received from the property and then the investment doesn't look all that good. Those muppets you speak of are plentiful enough.

Property investement is more about getting the rent, property speculators are about hoping the property appreciates in value and making their money from that. As time goes by the mortgage reduces rent gains pick up. The idea is that you own a house and have it as an income generally eqivilant as a salary. You are set in a very narrow view of what and who investors are. I am telling

Imposter wrote:

But property prices have to rise faster than regular inflation for investors to make money from a sale. I agree interest rates won't rise by much or very fast.

That's only under one principle of property investment. You know owning more than one property out right when you retire would provide a large income for retirement and can be sold for direct benifits.Invest 300k into anything as cash and see what your monthly return is. It won't be €950 a month!(€1500 after tax etc..)

Imposter wrote:

If you want free market principles to aid investors/owners as the prices rise you should expect governemnt intervention to keep the prices high. That in itself is a sure sign that the market is overvalued.

I have never suggested that they should, I always suggested government intervention and suggested taxes that would be negative to me. I think you might have missunderstood me.

Imposter wrote:

Get a dictionary and look up the word speculation and the word fact. Assuming speculation is not what you meant, seeing as your views are based on fact, you are basically just saying you are right and that's it. Seeing as we are talking about the future and about a market you say is unique i'm amazed you know for sure how things will go.

There really is no point in getting into symantecs. My view is opinion but based on hard facts I am not saying it is absolute fact. But I am not saying it is people with holiday home causing house prices and not providing evidence to back up the theory. You have said investors are the problem but basing it on no facts. Iam not saying it isn't the case but to say it is you really need to say why. I have said population age, high home ownership and supply of houses is the problem but backed it up with actual figures.

Imposter wrote:

I was rather young then but all of my family (aunts/uncles as well as other neighbours) all managed to buy/build houses then. Most were working off one income and not an overly high income at that. Yes some people in the area got council houses (and cheaply) but many others had their own. Role on 20 years and people in a similar situation cannot even consider buying or building because of the cost.

Well if you were in a relatively well off area or social circle as a child (have to guess because you couldn't just state you age) you wouldn't notice the heart ache in trying to get a house in the 80s. As the masses got free/cheap housing and no jobs they weren't competing for middle class housing. When the started competing as employment went up it forced prices up. That in fairness is a mass of assumptions but even to suggest the 80s was a good quality of life is really offensive like saying it is easy to get a house now. THere are of course some thing that have gone up and down but people aren't forced out of the country.

Imposter wrote:

Where are tradespeople earning as much (anywhere in the world) compared to teachers, guards, nurses etc?

The US and the UK for starters. A full tradesman earns a good wage no matter where. A carpenter spends 5 years as an apprnedice which is more training than a cop in most countires.

Imposter wrote:

The reason I used those professions earlier was that they were some of the better middle class professions of the time we were discussing.

So was working in a bank or insurance compnay but that is diminishing to the class of job that pays minimum wage. A bank counter worker in the US is considered a very lowly job. Social classification is not economic classification. A factory worker can make more money than an IT worker etc...

Victor · 20-07-2005 7:53pm

Bluehair wrote:

Using stats like this is the very definition of property speculation. Nobody knows what the growth rate will be over that kind of time frame and yet there are many people betting their future on it

We can't be 100% sure, but we can be reasonably sure there will be a substantial increase, given the large cohort of people in the 20-40 age group (when people tend to have children). Even if they only replace themselves (approximately 2.1 children per woman), we will still have population increase. Even if they don't replace themselves (say 1.5 children per woman), we will still have population increase.

ionapaul wrote:

Where did you hear / read this? Isn't the population of the Republic of Ireland currently around 4 million? That seems like an amazing population increase within 20 years, doesn't it?

In the late 1960s it was less than 3 million.

Thomond Pk · 21-07-2005 1:32am

Most of the demographic increase is generated by net in migration from a small number of Eastern-European States. These people are a lot less likely to buy property here than the Irish and this not because most of them would be priced out of the market as they are it is because a 3 bed semi outside Kracow costs about 25k

With prices like that it is easy to give 100% mortgages to those in secure employment in Ireland as they would also have the investment income from the house and both combined give a combined income to capital value finance of about 1 year of income or the case of a couple six months. In contrast if the same couple looked at a typical starter home in the GDA it is six years purchase or individully 12 years purchase.

SixShot · 21-07-2005 4:16pm

its best to find out if any one is doing it & what the catch is some things are to good to be true

Rubens · 22-07-2005 6:12pm

2 Obvious points regarding 100% mortgages:

1) Its a good thing for people who would normally have to save say 30k before they can buy because in the current market the house will have gone up by 30k by the time they have saved it so they are effectively saving money and getting to live in the damn house sooner..

2) A lot of people borrow a portion or all of the deposit from Relatives/Credit Unions (I did on my first house) so whats the big deal with having all the money owed in one loan.

Simple.

RJ

SkepticOne · 23-07-2005 2:21am

I think we're going to see amazing house price rises over the next year or so. One of the major constraints has now been removed. Other banks have (as predicted) announced similar products.

I would not be surprised if investors pull money from abroad to cash in on the boom.

MorningStar · 23-07-2005 8:33am

Rubens wrote:

2 Obvious points regarding 100% mortgages:

1) Its a good thing for people who would normally have to save say 30k before they can buy because in the current market the house will have gone up by 30k by the time they have saved it so they are effectively saving money and getting to live in the damn house sooner..

The problem is they will cause the market to rise and price more people out of the market. They also end up in more debt. If there is a downturn the last in end up with negative equity as opposed to having their deposit buffer.

Rubens wrote:

2) A lot of people borrow a portion or all of the deposit from Relatives/Credit Unions (I did on my first house) so whats the big deal with having all the money owed in one loan.

Some will do both now with 100% mortgage and a debit to family/friends. Increase debit from the old 80% debit on a house to 120% or higher! It real is a dangerous situation regrdless of a down turn. It is based on an increasing market which will not happen year on year forever.

Rubens wrote:

Simple.

Not so simple

Thomond Pk · 23-07-2005 3:58pm

I totally agree morningstar the effect of this can only be inflationary, just because some people are already leaning on parents or borrowing from other institutions at higher rates of interest does not make this any less dangerous from a monetary management point of view.

I am amazed that the Central Bank and The Department of Finance have stayed quiet on this as with a falling euro interest rate policy will have to be reconsidered going forward.

All loans should be stress tested to assess the borrowers ability to repay mortgage rates based on ECB rates of 4.500000%

MorningStar · 25-07-2005 4:46pm

Noel Ahern being quick came out today to say it wasn't a good idea. Isn't he like in charge of housing or something?

jhegarty · 25-07-2005 5:15pm

MorningStar wrote:

Noel Ahern being quick came out today to say it wasn't a good idea. Isn't he like in charge of housing or something?

he also said it would push prices up.....

Thomond Pk · 26-07-2005 12:18am

Social Housing and his remit has been to ransack the local authorities and semi-states for strategic commercial holdings or pivotal regenration landmark building sites that can be swapped for starter homes that are currently selling poorly in far inferior locations. Harcourt Terrace canal front site for something beside the M50 in D11 is the 'model scheme'

Article" House prices affecting wages - SFA

July 25, 2005 07:20
The Small Firms Association has said the affordability of housing has reached crisis point and is causing problems for the labour market and wage inflation.

In its housing report for 2005, the organisation's director Pat Delaney says the explosion in house prices and a sustained increase in rents is putting pressure on wage demands.

'Any suggestion of price moderation in the housing market has proved to be just an illusion,' he says. Referring to the decline in the rate of annual price increases to 11% in 2004, Mr Delaney says such increases are being applied to a higher base each year. The SFA claims that the average price of a house more than doubled between 1999 and 2004, while the cost of building rose by only 33%.

Mr Delaney calls on the Gopvernment to improve the position of first-time buyers and reduce the numbers on housing lists from the current 60,000. He says local authority house completions dropped by 21% last year, describing this as 'bewildering' given the importance of the issue.

http://www.rte.ie/business/2005/0725/sfa.html "

100% Mortgage Anyone

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