2 out of 3 young adults living at home

…what are you on about!

Did you live in an apartment during COVID by any chance?

Apartments are part of the solution but they need to be fit for purpose. We have a torrid history of building fit for purpose apartment's in this country. We also can't say that we are the same as southern Europe when it comes to living. There are numbers of apartments there but they have better public open spaces in general and better weather specifically making you aren't couped up for long spells.

They are probably more of a partial solution to the rental crisis in our cities but not something we can compare with elsewhere.

While lots of adults live at home there are parts of the country where there aren't

People are generally in secondary school till almost twenty nowadays and with the increases on college places many people and parents chose for their kids to remain at home. It's the years after college that need to be tackled if that is as big a deal as it is being portrayed.

Living at home for a couple of years while working should mean you can save for something resembling a deposit. So why is that not happening? Another question that needs assessing..…

But you understand that if it has value, and you own it, it is an asset?

I don't care. That's not why we bought it. We bought it because we wanted a "home", not an "asset" to be flipped.

That kind of wooly "thinking" has only really been around for about 25 to 30 years in Ireland. This idea that "homes" are "properties". Something that's a financial tool rather than a practical shelter. A place to live in, long term, where families can be raised and communities formed.

The commodification of homes has seen us spiral downwards into the quagmire that exists today and it ain't pretty and the future has many, many problems on the back of that. That kind of attitude needs changing if we are to ever get out of the ditch we're in at present. People need to get back to the idea that they're buying a home to lay down roots of some kind. Not some illusionary "marketable" product in a market that they'll never truly be a part of.

Put more simply, if the situation arose where you had to raise money, you could sell your home. Ergo, it is an asset you can sell.

That situation should be something that's by the by and not the main reason for buying a house, which has become front and centre for too many people who think they're going to be some sort of wheeler dealer on a market they have little real understanding of.

This is why we've ended up with so many accidental LL's in this country.

All true.

Tony could sell his €750k home thats not an asset. Buy a new home in your part pf the world and have over half a million euro in his back pocket for his trouble. :)

Now you are talking :)

I've always felt that the Irish view on property is a very outdated model. I'm Irish myself but have lived abroad and the continent's view on housing is not only more realistic it's far more sustainable. We're decades behind in our major cities being fully equipped for large scale high rise apartment projects eg, lack of metro system, not enough public spaces etc.

My belief has always been that apartments should be built not for BTL purposes (rent often means people can't save for deposits) but for younger people to purchase when they are in their 20's and don't require a 3 bed semi with gardens at this time in their lives. As they get older and begin to start a family if they desire they can trade upwards for the 3 bed semi suburban life and they sell their apartment to the next couple in their 20's looking for their start on the property ladder.

Maybe it's a too simplistic or sensible idea for the Irish property market.

Someone trading up from an apartment to a semi-D will have suffered with inflation, someone trading down from a detached house in a prime location to a rural cottage will have made a small fortune

You are neglecting the value of existing equity when trading up.

A simplistic example to illustrate. You buy an apartment priced at 400k with an interest-only mortgage of 300k. Your aim is for a house worth 600k.

Scenario A. In one year the housing market has halved in price. The house you really want is available for 300k. But you are in 100k negative equity on your existing apartment. You are going to be looking at an LTV of 133% for your trade-up. In other words - not gonna happen.

Scenario B. In one year the housing market has doubled in price. The house you really want is available for 1.2m. But you now have 500k equity in your old apartment. You would be looking at an LTV of 58% for your trade up.

Living in Germany at the moment. I live in a nice city where rents are considered high and it's dirt cheap compared to Ireland.

My neighborhood is about 15 minute walk from the city centre. It's a nice little neighborhood. Loads of shops, supermarkets, cafes restaurants and bakeries on the main st. If I continue walking for 10-15 minutes I end up in another neighborhood that's similar. And it's the same in whatever direction I go. Every building is on average 6-7 stories. This means greater population density. And it means that the neighborhoods can be close together.

It also means public transport is more effective. The trams and ubahn don't have to stretch out 20km.

In Dublin we went for sprawl pretty close to the city centre. So there's a bigger gap between neighborhoods. And it gets worse further out.

Now people are expected to move 20 miles out and it's still expensive.

I used to work for a US multinational. I was at the end of the BART line in San Francisco. I their equivalent of celbridge. Prices there was so high I asked how the people who worked as baristas in the local coffee shop could afford to live there. And I was told they lived hours away and commuted every day.

That's what we're turning into.

Take your example, a couple on 100k with a 300k mortgage @3.5% to buy an apartment.

x3 their earnings with a monthly of X

Now they decide to trade up.

In scenario B with a LTV of 58% they need 700k mortgage

x7 their earnings, with monthly repayment of 3.143, which is 37% of their gross on mortgage repayments. Not gonna happen.

Actually scenario A is probably better provided they don't lose their jobs in such a huge property crash.

They're only 400k from buying the bigger house, instead of 700k, even though they're in the hole by 100k.

Am I right with this?

It was a simplistic example to illustrate the point. And one can always find an edge case or an outlier such as there being either a crash or a huge jump where the hypothetical couple's circumstances do not otherwise change. But that isn't really likely for the vast majority of people.

In reality, while a "crash" can happen quickly, rises are generally a bit steadier and linked more to general economic factors (in any remotely functioning market). House price rises would be accompanied by some increases in wages etc. (Your original post I responded appeared to refer to "inflation" in the general sense but I don't want to get sidetracked on that as it is the same idea).

An inflationary environment ends up being very good for those who have leveraged assets. People who bought houses in Ireland in the late 80's or early 90's generally ended up with relatively small mortgage repayments compared to their early 2000's income. The amount you owe remains fixed but the value of what you own jumps.

It is different of course for the person "cashing out". But trading up will generally be easier with the additional equity. Once you are "on the boat", the tide will have lifted what you already have, thereby hedging you somewhat to any increases.