# The future of Dublin property



## paddyirishman (19 Jan 2003)

I am currently contemplating on buying my first property in Dublin; I would appreciate everyone’s gut feelings on the current prices. Are they over priced ? Are they value for money ? Is a fall is property prices likely ? I am trying to get a feeling on how property prices in Ireland will develop given the very unpredictable times we live in.

I think at least, Ireland and Europe on a whole could be heading for a serious recession in the coming years. When you think of all the negative knock on effects of the global melt down of the IT sector (possible relocation of these IT companies), reduced tourism to Ireland for obvious reasons, possibility of increased unemployment, influx of cheap eastern European employees to main land Europe, the changes to grants to the agriculture sector, the widening gap between income and property prices and even increased taxes / reduced work force problem etc etc.

I don’t want to sound like a complete pessimistic but the future may not be very rosy and certainly nothing like the prosperous times the Irish had in the past few years. 

After saying all of that – will property still increase due to lack of supply ? Is there no possibility of a fall in property prices ? Can prices stay at there levels even if a serious slow down develops ?

Appreciate your thoughts.


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## Pettu (19 Jan 2003)

*house prices*

It is in the interest of companies that provide survey figures on the movement of house prices to declare that house prices are continually going up and that the boom will never end. I however truly believe that house prices are coming down (especially second hand houses outside Dublin in last 6 months). Vendors are finding it hard to get anywhere near their asking price figure but the original asking price figure is often quoted in the 'survey' data. I bought a great house for a bargain 3 months ago for 30% less asking price.


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## flash (19 Jan 2003)

*house prices*

without breaching your own privacy/confidentiality
Can you give us some more info on the 30% reduction,
area?
type house
exceptional conditions,
range,
etc

F


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## ClubMan (20 Jan 2003)

House prices are determined by a few major factors - interest rates, unemployment figures, and supply and demand.

Experts say that interest rates are likely to remain low in the forseeable future. Unemployment, while rising is still very low.  And finally, demand for houses is still outstripping supply.  These factors would indicate that while house prices may never grow at the rate they did over the past few years prices will remain strong and will continue to grow (in 'best locations) albeit in single figures.

_Edited by ClubMan to remove extraneous blank lines._


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## rainyday (20 Jan 2003)

Hi Paddy - Is your intended purchase a property to live in, or is it purely an investment?

If you're going to live in the property, that I'd suggest you don't get to het up about short-term fluctuations in property prices. The only thing 100% certain about property prices is that NO-ONE can predict the future. They may go up or they may go down, & you can't time the market.


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## Pixie (20 Jan 2003)

Not sure how relevant this is, but might be of some interest.

I remember reading (a few months ago) an article on a leading UK financial website about the the UK housing market.

It stated that historically (going back over the last 50 years), the average house price in the UK was about 4 times the average pre-tax income.

Sometimes less than 4, sometimes 4 times, sometimes more than 4 times.  In the current UK housing market it is much more than 4 times.

The article stated that the further from 4 times income the property market was, the more likely it was to "re-adjust".  

It would be interesting the know the average pre-tax Dublin income, and also the average price of a residential property in Dublin;  (or just generally in Ireland for that matter).

I wonder how far we are from 4 times income?!


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## Liam D Ferguson (20 Jan 2003)

Well the Permanent TSB house price survey from late last year indicated that the average house price in 2002 was over €200,000 (more in Dublin).  This would suggest an average salary of €50,000.  I have no statistical data on average salaries.  Anyone?


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## eusebius cassidy (20 Jan 2003)

*London??*

If Pixie's theory is correct, we are all in serious trouble, as Irish average incomes per capita are less than €30K per year. If we assume an average earnings figure of €35K for Dublin and €25K for the country, 4 times the Dublin figure is €140K and 4 times the country figure is €100K.

I think that events in London are always a good indicator of Dublin; This tends to be the same if you are talking about employment trends, property, shopping or even fashion and the arts.

Since last November, the Financial Times have been talking about a serious property price slum in London. On last Saturday they had a whole page dedicated to what they see as a serious slump in residential rents. This is turning Buy-to-let into a nightmare for some investors.

London has the same macroeconomic factors as Dublin - 1. a recent economic boom which was fuelled by the success of the tech and financial services sectors

2. up to recently a shortage of rental properties which is now turning into an oversupply

3. low or modest interest rates

If we expect Dublin to follow London this time, then the property market is heading for a tough time.


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## paddyirishman (20 Jan 2003)

*London??*

This is what worries me about buying now; the thing is salaries have not kept abreast with property prices. How can a person or even a couple both earning 30k purchase a house worth 205k or 300k ? if only one earns or one finds themselves unemployed, ill etc. ???

I’m currently on an expat salary (tax free) which would be twice what I would get if I were to return to Ireland, even with this salary it’s difficult to entry the property market – what is it like for the average guy on a salary under 30k……??? Property in Ireland does not add up.


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## joxerdaly (20 Jan 2003)

*Property Prices*

Hasn't Rainyday just put his finger on the button - that NO-ONE can predict the future.
Every second day there is a fresh report on the fate of UK property prices. The latest is Ernst & Young Item Club who believe the UK economy is fundamentally sound and that any moderate falls in house prices will be tempered by 33 year low interest rates. You also have supporting the housing market favourable demographics, inward migration, low unemployment and better financial products than ever before. Surely the pension crisis and doubts about the stock exchange will encourage more to see a second home as the retirement investment.

As mentioned already if someone is happy to go for a home, and has done all the financial stress-testing, then I believe it makes sense to get on the ladder.


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## Pixie (20 Jan 2003)

*Property Prices*

Paddy,

when getting involved in this debate, there is always an (understandable) problem with getting unemotional responses.

Anyone without a property is going to say the market is going to fall.  Anyone with a property (*especially* if they have purchased anytime recently) is going to say the property market will continue to rise forever.

The market at some point will re-adjust.  Markets always do, it cannot rise at a greater rate than income forever.  Even if rates are low, it cannot rise forever.  

If I remember correctly, when the property market in Japan crashed, weren't the rates extremely low?  Something daft like 0.1%, but it didn't stop the market crashing.

I don't know when it will "re-adjust", but I have doubt it will.  

As Bogart said, "Maybe not today, and maybe not tomorrow, but soon".


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## Delboy (20 Jan 2003)

*House Prices*

Pettu - as a FTB who has been looking seriously in Dublin for the past 6 months, I can say for certain, that house prices are not falling on 2nd hand houses. I find that the selling price is usually 10-15% greater than the original offer price. And at every viewing there are 10-20 other people interested in the property.

I have bid on several properties but so far have not been successful. 

As for average wages, is'nt the average industrial wage in Ireland around 25K which would leave houses very over-valued. But thats all relative to demand.I am currently bidding on a south side house near the city which is just under 7 times my salary. How am I getting a mortgage? I am lucky enough to have parents who are in a position to guarantee the mortgage for me. And I will also have to rent out some rooms to pay the mortgage. Otherwise I'd be renting forever or emmigrating. 
But in terms of the future of house prices - I cannot see them declining. I know of several friends on well above average salaries who are  ready to buy in the next year or so. There are a  lot of people on the sidelines ready to purchase if things do slow down,and with interest rates likely to drop again,things are going to remain as are. I thought last year they would slow down so I waited which was a foolish move. 
Hope this helps you PaddyIrishMan


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## Contango10 (20 Jan 2003)

*Average earnings*

I looked up the www.cso.ie website and found the following data for average earnings

Industry            (Sep 02)  26,478
Financial Sector  (Mar 02)  36,143
Construction      (Sep 02)  34,747
Skilled worker in Construction  41,571
Public sector      (Mar 02)  36,415

Remember there are only 250,000 workers in Industry, out of approx 1.75m at work, so maybe Average Industrial Earnings are not the best indicator of earning power.

It's a shame the CSO don't publish "Average Earnings"  data across all employments.

Contango10


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## ClubMan (20 Jan 2003)

*Re: Average earnings*

Is the Department of Finance monthly economic bulletin of any more use in this respect?


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## frfluffybottom (21 Jan 2003)

*re*

Every person i've ever spoken to considering buying a house asks this very question - are prices going to drop.  I can't understand why people are so worried about this when they're buying to occupy.  If you own your house, whats the big deal if the value drops from 300K to 250K??.  You'll still be living there.  Are people worried that they're not going to get the huge increases of previous years?.  I bought my house exactly 1 year ago, and it's value has increased by 30K already.  I'm certainly glad I didn't less to my propertyless friends who warned me of the inevitable crash that was just around the corner.  My advice is if you're paying rent, buy a house and pay your own mortgage rather than somebody elses.  Average rent of 1000 euro per month is 60K over 5 years.  Worried about the crash?.  How does 60K down the pan sound?.


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## eusebius cassidy (21 Jan 2003)

*buying now*

If property prices do start to crumble or tumble, then the banks will be sure to tighten their lending policies. In that case many first time buyers (particularly if they are heavily borrowed) might find it more difficult then to buy a house compared to now.


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## rainyday (21 Jan 2003)

*Re: buying now*



> might find it more difficult then to buy a house compared to now.



But surely any tightening of credit policies would be balanced out by the actual drop in prices, i.e. if prices are lower, then it's easier to buy!


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## Scoobie (21 Jan 2003)

*Average earnings*

Sorry, don't want to scare anyone, but borrowing 7 times income is, to say the least, not very sensible!!!

If prices are at a level where you have to borrow 7 times your income, then it's far too overinflated.  Simple.

I know someone who purchased a terraced house over 30 years ago, and they paid £2000 for it.  Do you know how much their pre-tax annual income was at the time?  - £2000!

Therefore, they paid 1 times annual income!!! 

Once you get to the level of having to pay 7 times income then it's overpriced.

Someone said earlier about Ireland having good demographics, maybe, but what young person wants to remain somewhere where they have to pay 7 times income, have their house full of strangers renting every spare room, and get their *parents* to guarantee their mortgage???!!!


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## eusebius cassidy (21 Jan 2003)

*assumption*



> But surely any tightening of credit policies would be balanced out by the actual drop in prices


That is an assumption. There is no way of knowing whether it would automatically apply in the event of a downturn. 

Ten years ago, many people on good incomes found it hard to raise the £40K or £50K that it took to buy a respectable family home.

For example, most banks and building societies would only lend to people who had established decent savings records with them, or if they were on personal terms with the bank manager.  

Because the property market was seen as volatile,  banks were paranoid about the possibility of bad debts. 

Many people have forgotten that these things ever happened and might occur again.


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## paz amor (21 Jan 2003)

*Question??*

Paying 7 TIMES YOUR SALARY for a house is the most ridiculous thing I have ever heard. How exactly do you plan on paying your parents /lender back that amount? With your lotto winnings? What really frustrates me is the fact that these kiddies who are relying on their parents for money & this is probably sustaining these inflated house prices to begin with!

Can anyone tell me, is it the case (as previously stated) that house prices will sell on average for 10 –15% higher than asking price?


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## Sarah Wellband (21 Jan 2003)

*Damned statistics!*

No one is borrowing 7 times their salary because lenders will advance no more than 3.75 times a single or joint income. The lenders also "stress test" the mortgage to check that if interest rates go up by 2% the mortgage repayments will not exceed 35% (or possibly 40% - depending on the lender) of the borrowers net monthly income.

The 7 times income figure is the average property price in Ireland divided by the average industrial salary. At one end of the scale you have people who bought their houses 10,20,30 years ago and have little or no mortgage outstanding (nice target market, eh EBS?   ) and at the other you have FTB's who are still managing, just, to buy. Perhaps not the 3 bed semi with a nice garden within walking distance of work they expected to have as their first home but a "make do" until they can move up the ladder.

The initial question was - should I buy now or wait? As Rainyday and others have said neither you nor I can predict or affect house price movements. If you feel mature enough to take on the responsibilty of owning a home, are comfortable with the repayments and can envisage yourself living in the property you've seen then go for it. 

Sarah

www.rea.ie


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## delboy (21 Jan 2003)

*House Prices*

Paz Amor - I never said I was borrowing money from my parents, I'm getting them to guarantee my mortgage. That's how I get the extra multiples of my salary. I have gone through the figures with 'experts', stress tested them etc and have found I will only be paying slightly more on my mortgage than on rent (and thats a 25 year mortgage ,not 35). Yes I have to rent out 2 rooms ( to people I already share a house with and have known since college). But if I don't buy I will be continuing to share with others but will be paying someones else's mortgage. The house is in a good location with good rents, so I cannot see any problems in renting out rooms if they became available.
I'm in a secure job with a probable payrise this year. I would'nt be doing this if I did'nt think it was feasible. I believe mortgage rates are going to fall further and that there's a lot of people on the sidelines yet to make a purchase. I just cannot see houses getting cheaper in the forseeable future. So I'll pay off my mortgage rather than someone else's

As for your Kiddie taunt, I'm nearly 30 and responsible enough to make a decision on what I believe to be a solid basis. I also stand by the 10-15% above selling price figure I gave. I have no reason to make this up. After 6 months of serious house hunting and bidding, I have found this % range to be true on nearly every house I've tried to buy


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## paz amor (23 Jan 2003)

*I still have reservations*

Fair enough Delboy, I can see your desperation in wanting to buy in this current crazy market – join the club! However, by getting your parents to act as guarantor, you are in effect, creating a “lending norm” – I am finding that more & more banks are refusing loans until your parents can act as guarantors for a lump sum of e.g. €50,000…. Frankly, I don’t want to have to ask my parents to act as guarantors to satisfy greedy mortgage lenders. But if you subscribe to this norm then all lenders will expect everyone to do the same and it’s not very fair on regular savers like myself who can’t keep up with inflating house prices yet wouldn’t expect their parents to act as guarantors. 

Now, I like your self wud be wise enough to have ample insurance coverage against redundancy & sickness & death (via mortgage payment protection & mortgage protection) & like wise I am in a very stable job with definite foreseeable payrises. However, at the end of the day, if something god forbid does wrong or there is a default with insurance etc… the banks aint gonna care about you or your parents situation because they have the lovely security of a great big house(s) waiting for them. 

Your case parallels that new scheme released this week which allows parents to re-mortgage their homes to provide their kids with a lump sum – it’s just so frustrating when people don’t realise that they are maintaining these inflated house prices by having their parents either acting as guarantors or re-mortgaging to give a deposit lump sum…. You may be only paying a little more than your previous rent but at what cost to your parents well-being? 

I just hope you have started long term savings now for your (future) kids so that you won’t have to worry about decreasing your security in your retirement!


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## SUE (24 Jan 2003)

*I'm going for it*

I've bought a house which I move into in May (PG), and including my payment protection etc I'm nearly 100 euro better off for a bigger house which is my own.  My parents gave me the deposit etc. 25k in total.  Neither my brother (who bought 3 yrs ago) or I could buy a house without the help they gave us and I don't see anybody else lining up to help young people find suitable accommadation.  My mother put it like this, why save for the next few years for a deposit when she can give it to me and get me out of the renting nightmare.  We would be years saving aswell as paying 950 rent every month, all that dead money for nothing.  So she takes the hit for the deposit to give me and my familly the security we need and can't get from our government and I'll pay her back when I get on my feet.  My brother pays her back every month, he has a direct debit set up.  He is single where as I have a family so it will take me longer to pay her back, but I know there is no pressure, she said not to worry.  When she bought her house it was the scariest move she ever made and her parents helped them out.  Its always a struggle starting out but you have to start somewhere, even with a little help from your family.  We tried co-ownership, not enough for the area we work near and forget about the list, we are a legit couple who both work and declare their co-habitation.  What choice do we have?


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## Just a thought (24 Jan 2003)

*I'm going for it*

That's true.

I just feel sorry for so many people who simply do not have such options.

Many, many people don't have the option of borrowing 25K from their parents.

For many people 25K is their life's savings.

For many other people they would never have had anything like 25K in savings.

With spiralling house prices, you can easily create an underclass, which is not good for any country.  Of course, no-one can think about such things when they are simply buying a house for themselves.

Though policy makers should always remember the highs of a spiralling house market can unfortunately have long term negative social impact.

Just a thought!


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## Another thought (25 Jan 2003)

*your good luck*

Sue

ther's always someone around to make you feel guilty. Don't!

Enjoy your good fortune in having a caring mother who is able to help you at this time.and Good Luck in your new home. 

Just another thought!


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## paz amor (29 Jan 2003)

*A reply...*

Well here’s another thought….. why didn’t you save for a deposit yourself to begin with? Before you go ranting on about renters being unable to save for a deposit….. I am renting – yes , it’s crap that so much of my money is being “wasted” on it especially when my salary is by no means great but I have DRASTICALLY adjusted my lifestyle so that I am still saving a nice lil’ lump sum to hopefully pay the bulk of a deposit with my partner….I expect to get an average house in (perhaps) a not so great  area…… the point is that it can be done. I may have to wait a bit longer to get a deposit, I may have to live in the house no where  near any of my dreams, but I don’t have to take off my parents. Sue you just proved my point – you are of the mentality of “why bother saving now when we can conveniently get the deposit my parent” & (yawn) “pay her back when you get on your feet”…. This is what’s creating the unbelievable demand for houses now because everyone is expecting their parents to contribute to FTB thus, making it harder for regular savers like myself to get in the market to begin with. Why not have just saved for those few years and saved firstly, your mother the hassle of having to worry about whether she will be able to get her money back in the future for her retirement and secondly, have you worrying about whether you will be able to pay her back! Nonetheless you seem happy & am not going to argue with you so congrats on getting your house anyway!


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## Jane (29 Jan 2003)

*Another reply*

Paz amor,

I agree with you.  I bought a house on my own last year.  I worked two jobs to save for the deposit.  It was tough, but I am of the same mentality as you, save first & then spend. I wouldn't dream of asking my parents for such a large amount of money.  They've worked long & hard to save a little nest egg for their future, which they are enjoying now.  

If Parents can afford to do this for their children, fair enough, but I think it's unfair of "Children" to expect this of their parents.

I come from a large family (7 kids) & each of us have always stood on our own two feet.  3 of my brothers have their own business.

Lastly, it's much more rewarding when you can say I did it all on my own !!

Jane


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## weathergirl (30 Jan 2003)

*FTB*

SUE "what choice do I have?"

Well, you have 2:
a). Buy a far less expensive house
b). save for a deposit 

If Paz, Jane & I can do it, then I don't see what makes you exempt?


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## Alex (30 Jan 2003)

*FTB*

What makes her 'exempt' (strange word to use) is having parents who are well off enough to help her out.  There is definite jealousy and sour grapes creeping into this.  Not all parents are living on a small nest egg scrimped and saved over the years - some are very well off and happy to help their children buy a nice house in a nice area, perhaps close to them so that they can see their children/grandchildren regularly.  What's wrong with that?


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## weathergirl (30 Jan 2003)

*FTB*

Nothing...excpept for the fact that it could create a situation where children will be expecting their parent sto do it for them regardless! Who wants a greddy, selfish culture - lets leave that to the lenders!


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## Alex (30 Jan 2003)

*FTB*

That's a bit of a sad indictment on Irelands 20-somethings and 30-somethings.  I hope most people would be aware of the general state of their parents finances (not in minute detail obviously but comfortable/not comfortable/very well off levels) and would have been brought up not to be greedy and selfish.  Just because you see someone else get something from their parents doesn't mean that it becomes an automatic right for everybody (how stupid do you think people are??).  When I was at school a couple of girls got cars for their 17th birthdays but it never occurred to me that I should demand one too - I knew there was no way we could afford one.  

And whilst I do think that the current 20-something generation is more selfish and demanding than previous generations (primarily because they have never known hard times in the economy), I still think that most will know that there are limits to what they can expect from their parents.  Does anyone know of anyone putting pressure on parents to help out when the parents genuinely can't?


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## jane (30 Jan 2003)

*FTB*

Alex,

I agree, if parents are well enough off to help their children then so be it.  

However, today you see parents living beyond their means just to give their kids the best runners, the latest games console etc - This then sets a precedence for their children's expectations in the future.  I've seen parents re-mortgaging houses to help their children out.

I'm 27 years of age & don't think there is any great difference between my generation and that of my parents.  I think it's the values, ideals & expectations that parents instil in us from a young age that feed our views/opinions in the future.

At the end of the day it really is how you feel about taking handouts.  Personally I've never taken a hand out from my parents & have always worked hard to get what I want. I could have, but I didn't. It certainly makes the new car that YOU bought seem more precious or the first holiday that YOU paid for seem unforgettable !

Just a thought !

J


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## Alex (30 Jan 2003)

*FTB*

"At the end of the day it really is how you feel about taking handouts"

Handouts - another strange word.  You're not trying to make it sound like charity are you Jane?

Well-off parents helping their children to buy houses generally look on it as an advance on an inheritence which they would prefer to give when it is really needed rather than waiting until the children are in their 50s/60s/70s when an inheritence is nowhere near as much use (except for their children to help THEIR children ........).

You talk about parents living beyond their means and re-mortgaging etc. to give their children the best etc.  I think you'll generally find that you're talking about people who aren't very well-off to begin with.

Going back to the debate of whether parents should or shouldn't help out their children, it makes sense in a fast-inflating property market to buy as soon as you can - otherwise you may find that all your hard work and extra savings have been more than matched by the increase in price of the house you want.


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## jane (31 Jan 2003)

*FTB*

Alex,

Well then if it's an advance on their inheritance, sure that puts a different spin on it altogether.  Just hope that these "Children" won't be looking for another (_handout_) inheritance when their parents pop their clogs! 

With regards to Parents living beyond their means, I didn't make any suggestion that they were not well off.  You wouldn't be a bit of a snob now Alex would you? >D 


J


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## Alex (31 Jan 2003)

*FTB*

"With regards to Parents living beyond their means, I didn't make any suggestion that they were not well off."

I didn't suggest that you suggested it.  And in fact I know you didn't because it was me who suggested it! (although your mentioning of remortgaging to help their children does imply a lack of readies).

I don't think I'm a snob but I didn't like the implication in earlier posts that adult children should be made to feel guilty for accepting money that their parents actively want to give them.  In terms of visibly living beyond ones means (brand trainers, video game system etc. that you mentioned), I do stick by my observation that the most conspicuous spenders tend to be less well off.  Where do you think you would find the biggest concentration of satellite dishes in Dublin - a corpo housing estate or an upper middle class one?  Who do you think spends most on Holy Communion paraphernalia?


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## GeoffreyOD (31 Jan 2003)

*Observation of the ad.*

From looking at the advert the older gent appeared to be working\lower middle class so I'd say the building society are trying to target this particular section of society.  I'd say the building society is looking greedily at the value of all those ex-council houses close to Dublin city center which have sky-rocketed in price over the last few years and trying to impress on the owners of these houses their "obligations" to give a leg-up to their off-spring which is "taken for granted" in other sections of society(that's me trying to think like a yuppie ad. exec stretching out in his office in D2 or D4 who is trying to think like a working class middle-aged man).
Disagree with me or not but every ad. agency takes a lot of time choosing the type of person they want to appear in their Adverts.

I disagree with Alex on the point about working class conspicuous consumption.
The brands they wear are generally conspicuous because they are loud like Nike trainers where as you have to look closely for small orange Boss stickers but they're there if you go looking for them and you won't pull on a Saturday night if you don't have them : )
Small labels but still conspicuous consumption.
As for satellite dishes you don't have the same amount of space to hide a satelite dish on a 3 bed semi in a working class area with high density housing as you do in a leafy low density broker belt. 

No offence intended as this is only a semi-serious post.


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## JaJa (31 Jan 2003)

*Observation of the ad.*

just out of curiosity ........ is a Mercedes car conspicuous spending?

oh, it's just me then.......


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## Alex (31 Jan 2003)

*Re*

"is a Mercedes car conspicuous spending?"

Yes but not relative to income and it's unlikely to have sent its owner to a loan shark.


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## paz amor (31 Jan 2003)

*Get real!*

"is a Mercedes car conspicuous spending?
Alex's reply:Yes but not relative to income and it's unlikely to have sent its owner to a loan shark".


Yes, but when Mum & Dad pay for the childs Mercedes, how is that relevant to a childs lack of earnings? - Alex you are an unbelievable snob, perhaps you would be better off teaching a child how to earn to pay for a car so that he/she would appreciate the value of the car in the first place!


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## FTB (31 Jan 2003)

*Re: Get real*

Well in defence of Alex I happen to agree with most of what he says about parents helping out their children with house purchases. I'm getting some help from my parents and it's not something I asked for, in fact I told them I didn't want any help but they insisted that this was what they wanted to do and that they would rather ease the burden for me now to help me on to the property ladder. I very much appreciated this help and will endeavor to pay them back over time but to suggest (as some people here seem to be) that I or any other children expected this help is completely untrue and I'd harbour a guess that the vast majority of children do not expect help from their parents, but at the same time they won't refuse it if it's offered!  

And as for Janes comment "Just hope that these "Children" won't be looking for another (handout) inheritance when their parents pop their clogs!" ... I trust that was tongue in cheek (saw no smiley so I'm assuming!) ... otherwise Jane you need to take that chip off yer shoulder!!


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## weathergirl (31 Jan 2003)

*>>>>*

Alex, 
With regard to this whole middle-class parents giving their children a lump sum for a deposit v’s working class parents re-mortgaging their homes to give their children the same. You claim that that children of “well-off parents” should not be “made feel guilty for accepting money that their parents actively want to give them” and yet you do not appear to extend this “privilege” to “not very well off” households who want to re-mortgage their homes to do the same for their kids. 

Yet surely, as you say if this is just an acceleration of ones owed inheritance, then it shouldn’t matter where the lump sum comes from?

At the end of the day, it would appear in both situations to be (as Jane so accurately put it) merely a handout. We have had examples above from children who got lump sums form their parents for a deposit & who promise to pay back their parents some time in the future “once they get on the feet”/"endeavour to pay them back"!!!!!……. Contrast this with the lower income children who would have to have a structured re-payment system in order for them to be able to pay back the money back to their parents so that they secure their family home…………….. now who are the more responsible borrowers? – the children who can get through life on payouts from their parents or the ones who have to scrimp and save to pay back any loans they receive!

I am not saying that either situation is good, but perhaps it’s time we got back to basics and instilled a more healthy “savings mentality” among our kiddies while they are young!


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## Alex (31 Jan 2003)

*> >>>>*

I never said that less well-off parents shouldn’t help out their children – where do you think I said that?  The bit about less well-off parents over-spending was in response to Jane’s comment about playstations, trainers etc. – no mention of houses.

Although, now that you’ve introduced the topic I would just say that  there is a BIG difference between (1) less well-off parents remortgaging (risky) and helping their children with money that they (the parents) may need some day to pay for a nursing home (ie before they die and any inheritence becomes ‘due’) and (2) better-off parents who have surplus money/assets that they are very unlikely to need before they die – can you not see that?

“now who are the more responsible borrowers? – the children who can get through life on payouts from their parents or the ones who have to scrimp and save to pay back any loans they receive!”  
weathergirl - I don’t understand what you’re trying to say here.  Is it somehow a noble thing to suffer financial hardship needlessly?  And, getting picky, if the parents have no expectation of being repaid, I wouldn't really classify the children as 'borrowers' - but I can tell which group the banks and building societies prefer to lend to! 
In a similar way, Jane seems to think that you will only truly appreciate your house if you have worked mega-hard and saved furiously, swimming against a tide of rapidly rising house prices – that’s garbage – all you end up with are extra costs, extra stress and a chip on your shoulder.

As I said in a previous post, in a rapidly rising property market, it makes financial sense to buy as soon as possible otherwise extra savings will be more than matched by increased prices.


----------



## Charlie (31 Jan 2003)

*> >>>>*

"in a rapidly rising property market, it makes financial sense to buy as soon as possible otherwise extra savings will be more than matched by increased prices."

Historically yes, currently no...Prices are stagnant in the trecent short term


----------



## Alex (31 Jan 2003)

*> > >>>>*

Always yes.

"IN A RAPIDLY RISING PROPERTY MARKET ......."

I made no comment on the current state of the market (although I don't agree that it's stagnant).


----------



## jane (31 Jan 2003)

*Clarification*

Think we might have to move this thread to the "Great Debates" !!! (sorry should add a smiley face here)  

Just a quick point Alex & then I'll leave you alone :evil . I said & I quote _"It certainly makes the new car that YOU bought seem more precious or the first holiday that YOU paid for seem unforgettable!"_ Meaning that personally I find it more rewarding to reap the benefits of my hard work & effort.  Others may find it rewarding to reap the benefits of other peoples hard work or to come into their inheritance (whatever way you want to look at it), so be it.

Now if you'll excuse me I can't afford to waste time on the internet. I need to get back to work so I can earn more money to save save save  

J


----------



## Alex (31 Jan 2003)

*Re*

Jane,

I'm amazed at how warm and fuzzy inside going it alone seems to make you feel - you must walk around with a permanent glow.  When we bought our house (without parental help!) we were just so delighted to have it that we didn't even think to think 'aren't we great to have to done it alone'.  Ditto with my first holiday and my first car - thrilled to have them but again it never crossed my mind to think 'isn't this great to be reaping the rewards of my hard work'.  Do you really go through that thought process everytime you buy something?  

Anyway, best of luck with your saving and your house.  You should do whatever makes you feel happy and comfortable with yourself.  

BTW Tommy - did you know that if you move a topic while someone is in the process of replying, that their reply gets lost.


----------



## SUE (31 Jan 2003)

*each to their own*

weathergirl jane etc..Ok, I see how somebody who has to work extremely hard for their deposit would be annoyed when another person gets it handed to them, I hate seeing people I know get rent allowance, corpo housing etc and they don't lift a finger, and I'm not talking about people who need it, I'm talking about the thousands of women defrauding the social welfare system because they live with their partners without declaring it.  However thats none of my business, like its none of yours as to how I get my house.  I work very hard in a badly paid job, my own fault I know and intend to improve myself by going to college (while I work), but we cant save and pay the rent we do at the same time, we'd be saving for years and the prices just keep going up and up, rents going up and up, bills, bincharges, public transport, doctors charges all going up.  It wouldn't be a problem but I have a young son now and I need somewhere safe, secure and stable for him to live in, not meandering from damp hovel to damp hovel. For the first 6 months of his life I lived in a 2 bed appart where I had no fire escapes, I had to carry the buggy up and down the stairs, damp, drafty, faulty heating, etc.   I don't have a car, I shop in lidl when I can get a lift, I don't have satellite, nice furniture, big wardrobe of clothes, DVD player, wide screen telly, stereo system,  fancy nights out on the town or a holiday in the last two years.  I sit in everynight, have a bottle of wine on a friday, invite friends over and I'm still skint at the end of the month, saving 25k would be impossible.  When I say I'm on low income, I'm on low income, in fact we both are on low incomes!  My parents were going to buy a property as an investment and rent it out but decided to wait a few more years and give me the deposit instead, no strings, she said, "I hate seeing you pay all of that money for nothing"  and she's right, if anything its the extortionate rent young people have to pay to greedy landlords (parents also) thats causing the high demand for housing, we're being ripped off left right and centre. Why are there so many people on waiting lists, because they want to get away from renting, all walks of life, teachers, nurses, low income families, all cant afford deposits for their own homes and are trying co-ownership or whatever option is on offer to them.  I havn't asked my parents to put their own home against my mortgage, I wouldn't dare, they worked to hard for it, but if they can give me the deposit at no financial burden to themselves then I'm taking it.  Also, I could make you pay, I'm not married, I could have claimed to be a single parent on my own, got the rent allowance, medical card, one parent income aswell as living with daddy and benifiting from his income, then wait a few years another child perhaps and get housed by the council, all at your expense, all helping to clogg up lists, push up demand and also prices.


----------



## XXXAnother PersonXXX (31 Jan 2003)

*.*

I've heard that in Japan, house prices are so expensive that people get mortgages for 50-100 years rather than 20-30 years. The mortgages are then passed onto the off spring.

This could be lies though.

On the topic of parents giving their kids money, many parents want to do this. It's what they want to spend their money on - so let them.


----------



## Thats true (31 Jan 2003)

*That's true*

No, not lies.

That's true.

In Japan, many people do not invest in a second property because it's so difficult to buy one.

If you want to invest in land (property), people can invest in   ..............  grave plots.

Land can be scarce, so a grave plot is a good investment for the future in Japan!

Now, where's the number of that local graveyard!!!!!!!


----------



## joxerdaly (31 Jan 2003)

*FTB's*

Cash rich parents are unlikely to be making a fortune in returns  on equity or cash at the moment especially on an inflation adjusted basis. Helping their children onto the housing ladder is the most logical thing a parent could do. Beats paying rent. Might even bring people closer together.


----------



## ClubMan (31 Jan 2003)

*Re: FTB's*

*I've heard that in Japan, house prices are so expensive that people get mortgages for 50-100 years rather than 20-30 years. The mortgages are then passed onto the off spring.*

Isn't this something like the German (?) pfandbrief approach to long term (fixed rate?) mortgage lending?


----------



## Tommy (31 Jan 2003)

*Re: FTB's*

Its no wonder Japan is in a serious economic crisis (and Germany appear to be following them)


----------



## Red (31 Jan 2003)

*'*

Sue,
"My parents were going to buy a property as an investment and rent it out but decided to wait a few more years and give me the deposit instead, no strings, she said, "I hate seeing you pay all of that money for nothing" and she's right"

Your parents should have bought that property, and rented it to you. Owning your own home will not solve many of the problems you mentioned.
Rgds
Red


----------



## jane (31 Jan 2003)

*.*

Alex,

O but of course it does, that monthly deposit into my savings account is better than all my christmas' coming together - by the way, I'm being sarcastic here, this seems to have escaped your notice from my earlier post.

*BTW Tommy - did you know that if you move a topic while someone is in the process of replying, that their reply gets lost.* - No such luck !

Have a great weekend all !
J


----------



## Tommy (31 Jan 2003)

*Re: .*

Hi Jane, 

I like to think that I have many talents but, as yet, alas I have yet to master the art of telepathy with your good self.


----------



## Alex (31 Jan 2003)

*Re*

One of Jane's earlier posts: "Just a quick point Alex & then I'll leave you alone  . I said & I quote "It certainly makes the new car that YOU bought seem more precious or the first holiday that YOU paid for seem unforgettable!" Meaning that personally I find it more rewarding to reap the benefits of my hard work & effort. "

Jane's most recent posts:"I'm being sarcastic here, this seems to have escaped your notice from my earlier post."

When were you being sarcastic earlier (all of your posts perhaps?) because it was certainly lost on me - and being such a sarcastic, cynical person myself, I'm usually quick to pick up on these.  Do tell because I'd be upset if I missed out on a good piece of sarcasm.  Now I'm just off to enjoy the creme egg I bought at lunchtime - it's extra special today because I bought myself - with my own money - money that I earned myself - daddy didn't buy it for me - I think I should eat it slowly so that I can savour my achievement.


----------



## Jane (31 Jan 2003)

*Re: Re*

Alex,

Here's the sarcastic piece.  I've highlighted it so you'd be in no doubt.  Enjoy your cream egg, betcha it tastes nicer cause you bought it all on your ownyo !

*Now if you'll excuse me I can't afford to waste time on the internet. I need to get back to work so I can earn more money to save save save*

Have a good weekend !

J


----------



## Jane (31 Jan 2003)

*Re: .*

Tommy, that's funny, I knew you were going to say that - Weird  

J


----------



## Alex (31 Jan 2003)

*Re*

"by the way, I'm being sarcastic here, this seems to have escaped your notice from my earlier post"

But none of my comments had anything to do with the sentence you've just pointed out in your most recent post - they were about your 'I feel wonderful doing it on my own' comments.  Nothing I said referred to your 'must dash now to work harder to save more money' comment so why would you have thought that I didn't get the attempted sarcasm?

However,  I found Sue's posting to be quite sobering - do you object to her parents helping her?


----------



## Jane (31 Jan 2003)

*Re: Re*

Alex,

This is getting a bit boring now.  We're going around in circles.

Have a good weekend & maybe we'll clash again in future posts, or maybe we'll actually agree on something.

Toodle pip,
J


----------



## Alex (31 Jan 2003)

*I agree*

I've been involved in a couple of long debates before and they do degenerate into 'I'm cleverer than you are' followed by 'no, actually, if you look closely enough, you'll find (and I'm sure everyone else will agree), that I'm cleverer, wittier, richer, more attractive than you'.  So lets call it a day - although if anyone else wants to debate the parental handout issue, feel free.  

Good luck with your house and Sue, good luck with your house.  I'm saving for my children's house deposits (I'm 34 and I'm not joking (about the deposits, not my age!)) so good luck to them too.


----------



## flash (1 Feb 2003)

*alex*

and u were wonderful on Big Brother


----------



## XXXAnother PersonXXX (1 Feb 2003)

*Re: alex*

So who won out of Jane v Alex?

Maybe they could get together and buy a house


----------



## Billo (4 Feb 2003)

*Re*

While Alex And Jane were going hammer and thongs"(Jane's).

Red said above

Sue,
"My parents were going to buy a property as an investment and rent it out but decided to wait a few more years and give me the deposit instead, no strings, she said, "I hate seeing you pay all of that money for nothing" and she's right"

Red replied
Your parents should have bought that property, and rented it to you. Owning your own home will not solve many of the problems you mentioned.
Rgds
Red 


I read in a paper at the weekend that it is possible for parents to register for VAT, as sole traders before buying the house This would allow them to claim back the VAT from the outset, and could effectively get an interest free loan from the VAT man. The main advantage would be that this would reduce the amount that the parents would have to borrow to purchase the house. The parents would then rent the house to their offspring and also charge VAT. The article was by a Donal Buckley. Anyone know if this is above board.

Billo


----------



## Tommy (4 Feb 2003)

*Re: Re*

The article can be accessed here if you register with independent.ie

I thought the article was totally simplistic and possibly misleading. 

There is a potential cashflow advantage to be gained by a property investor if they register for VAT when purchasing a property. The whole plan works on the basis that the investor recovers the VAT on purchasing the property, charges VAT on rents and whenever the VAT remitted on rents exceeds the original reclaim amount, they are then allowed by the Revenue to de-register.

However, there are some serious pitfalls which were not mentioned in the article. 

First off is the possibility of a hefty VAT charge arising (13.5% of the sale value) if the property was sold before deregistration took place. 

Secondly the article was written on the basis that this could be a way for parents to help their children get on the property ladder, where the kids could pay market-value rent to the parents. However, it was not mentioned that in this situation the parents would find themselves being taxed on this income. When the initial capital allowances run out and the level of mortgage interest relief declines, the tax bills could be heavy. 

Mention was made in the article of an income tax saving over five years of €20,470 on rent from the property, yet no explanation was given as to where or how this tax saving would arise.

The article also mentions that if/when the property is gifted to the child, they would have to pay capital acquisitions tax on the value of a home worth more than €365,000. - For a start the relevant 2003 CAT threshold is EUR441,198. Secondly this would be assessed on the net value of the gift (i.e net of mortgage), not the value of the house. Thirdly, there was no mention of a probable CGT hit on the house as a rental property.


----------



## WSL (13 Feb 2003)

Average house prices are misleading, at least in Dublin. In Dublin there are always are a couple of million plus euro houses sold each month, which ups the average price.  It would be better if statistics provided the median price, i.e. the price you are most likely to encounter when looking to buy.  Remember you really are buying a mortgage and the ?housing service? that your house provides.  If you can afford the mortgage and have no need to move, fluctuations in the price of your house are irrelevant.  Once you are happy with your house and the ?housing service? it gives you, its value is irrelevant unless you have to sell. If there is a drop in house prices soon after you buy and you need to re-locate you may find yourself in negative equity, or the transaction costs of moving may be greater than any profit you may make on the sale. You have no way of knowing what price your house will get ten ? twenty years down the road.


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## PM (6 Mar 2003)

*house prices*

As the reply trail on this topic will testify to - discussions on house prices are never ending.  Most the discussion revolves around a macro view of the market and the economy.  For those considering getting into the property market and are concerned about timing, general market conditions are only part of the puzzle.

Firstly ask yourself: Can I get the deposit together and can I afford the repayments?  ( Assuming a 2% increase in interest rates)

Considering 'you have to live somewhere', what is the alternative to buying?  If the choice is rental and you are going to pay the equivalent to a mortgage repayment - you may as well buy.  At least you own an asset.  Yes, it may depreciate ( when the real estate market went bust in the UK in the eighties - property prices lost on average 15% ) but how would that compare to what you would have spent in paying rent over the same period.  

In addition, whether the market goes up or down after you've bought, it won't put any more ( or less ) money in your pocket.  The question you will still be faced with is - can I afford your mortgage repayment?  If you can then you can protect yourself to some extent from the crash by waiting for the market to recover over time.  Property prices dropping by 15% is of no concern to you if you are not selling !!! 

The property market may be a great conversation starter but each individual needs to examine their own circumstances, alternatives and make an appropriate decision.


----------



## XXXAnother PersonXXX (9 Mar 2003)

*.*

PM - that a good view on it.

I think people should also consider that a property crash may  coincide with a no-jobs experience.


----------



## mairead30 (18 Mar 2003)

*Property bubble*

Will the property bubble burst now that the was in nearly on its way and whe petol and oil prices goes up will this make everything mush more expensive


----------



## MAC (18 Mar 2003)

*Collapse......*

Not sure of the logic here Mairead, surely people in Ireland still need places to live. In fact if oil prices go up then prices in and around Dublin should icrease?

Anyway looking at the DOW and the NAS right now it looks like there is a high degree of relief that the uncertainty is being removed and the war is finally underway (they are obviously assuming a short war.... George Dubya is a visionary right?). 

I'm sure the yanks have planned in greater supply of oil ie. lower prices into the war plan scenarion modelling.


MAC


----------



## mairead30 (18 Mar 2003)

*House bubble*

If petrol goes up it must effect everything such as deliveries to shops and transport flying etc., house prices are falling in England according to rightmove website and their land registry reports.

France is going into recession and Germany is also in recession the two largest countries in EU hopefully Ireland will not be effect because of this and especially Dublin as it is already very expensive now there.


----------



## Tommy (18 Mar 2003)

*Re: House bubble*

Hello Mairead30,

I’d tend to disagree with your analysis that property prices are likely to fall.

The websites that you cite give little evidence for a property price fall. Rightmove doesn’t provide any commentary on the overall state of the market, while the [broken link removed] indicate that prices have risen on average 22% year on year in the UK.

Other sites such as Hometrack , or [broken link removed] indicate that prices are likely to slow, or fall slightly in some areas. However, few are predicting a big price fall, as interest rates and unemployment are still low and falling.

The situation for Irish house prices is very different though however. Irish rates are even lower than those in Great Britain, and, as you point out, with the economic problems facing France and Germany, are likely to fall in the short term, and are unlikely to rise substantially in the longer term.

The Economist ran an article recently, which rainyday referred to in a previous posting (but I can’t find !), which said that Irish house prices were substantially overinflated, due to the strong house price growth over the past 5-6 years. The Economist, being the oracle of the “gloomy science”, tends often to be pessimistic and alarmist. One press commentator recently quipped that they had predicted six of the last two global recessions.

The problem with their analysis, is that it rationalised from the general (property prices in NY, London, Amsterdam) to the particular (Dublin). Our strong economic growth, high rate of household formation, and low start point all meant that house prices in Dublin and other parts of the Republic were likely to storm ahead. Over the past two or three years, they have begun to slow down to inflation plus a couple of percent, which is probably sustainable.

All this analysis would go out the window though, should a little dictator in a far off oil rich land prove difficult for George W, and President Blair to oust. A prolongued Gulf War II could be catastrophic for the world economy, while a quick one could give the global markets and economies just the shot in the arm that they need at this point.

So in summary, I would see little reason to be alarmed about Irish house prices falling.


----------



## N0elC (18 Mar 2003)

*Re: House bubble*

Have some of these postings been moved ?

I had a lot of links included in my posting above, which now seem to have been deleted !

:mad 

Do I have to re-key them all ?


----------



## Tommy (18 Mar 2003)

*Re: House bubble*

Noel your original post is still  Nothing has been deleted.

The links should now be restored. Apologies for the editing oversight.


----------



## N0elC (18 Mar 2003)

*Re: House bubble*

Thanks Tommy !!


----------



## N0elC (18 Mar 2003)

*Economist article on house prices*

This is the Economist article that I referred to in my post above.


----------



## mairead30 (19 Mar 2003)

*house bubble*

This is the article that I was referring to have I got it wrong?

War and terrorism fears hit housing market

By Ananova

The slowing housing market has received a further blow as a survey showed more than half of people looking to move home are concerned that war and terrorism fears are affecting the market.

According to a survey conducted by property website rightmove.co.uk, 58.6% of people looking to move believe the market is being hit by these fears.

In London, 50% of active house-hunters say the concerns are directly affecting their home-buying behaviour, although only 32% of property seekers nationally say this.

The survey also showed annual house price rises in London have dropped from 18.3% in February to 10.9% in March, with a 2.7% fall for the month.

Managing director Ed Williams said: "It is unclear how deep or long-lasting concerns over war will prove to be.

"The situation has some parallels with the situation after September 11 when people continued to look at property on the Internet in huge numbers but took a few months to turn that interest into real commitment to move."

The figures could be of particular concern for the housing market as they reflect the views of people who are still looking rather than those who have decided to stay put.

Rightmove's house price index shows that the headline rate of annual house price increases fell by 1% from 23.5% in February to 22.5% in March. The monthly increase of 1.2% was entirely accounted for by increases in the north and parts of the Mid lands, with southern parts of England showing no change.

It also showed a sharp increase in the number of properties available for sale, in stark contrast to this time last year, when a shortage of available property was becoming apparent.

Copyright Ananova 2003 all rights reserved

17/03/03 07:17


----------



## Bearish (21 Mar 2003)

*Price Crash*

The trend for falling in houses prices in 2001 was reversed last year mainly because of Charlie's reintrodcution of interest relief in Dec 2001 for investors and ECB rate cuts in 2002. These are once off measures whose effects will not last in the medium to longrun. With unemployment rising, real disposable income falling, general consumer sentiment declining, euro appreciating and housing supply set to outstrip demand - prices are likely to decline over the next 2-3 years. I think the real problems of people over borrowing over the past 5-6 years will only become evident when euro interest rates return to their long run average.

All this talk that Ireland is a special case is misleading. If anything Ireland is more exposed to global trends than many of our larger neighbours. If the US experiences a double dip, US firms in Ireland are not likely to keep hoarding labour as they did during the 2001 recession. The job cuts will be swift and reality will quickly return to an overpriced housing market.


----------



## Smiler (21 Mar 2003)

*Bits....*

Read an article in the UK Financial Mail that the average Irish home costs 6 x salary.

The Irish housing stock increased by 4.8% last year.

Can it continue? Not a chance. Let's face it, if Ireland hadn't joined the Euro Ireland would now be in recession. It needed high interest rates to curb everything. It's simply putting the big POP off until later. Problem is the fall will then be greater.

Buying a house? Long term you can't go far wrong buying a house (unless of course you live in Japan!!), short term? Big problems!

Handouts? I hope to be in a position that I can help my kids out when they come to buy a house. It would be nice if I can pay a chuck of their deposit. Will I get involved in the Mortgage? Not a chance. I won't be held accountable if it goes wrong for them, by all means I'd help them but I won't get too involved. As long as they're responsible this won't happen them.

BTW when I die they get the lot anyway!!


----------



## ClubMan (21 Mar 2003)

*Re: Bits....*

*BTW when I die they get the lot anyway!!*

Not if you spend it first! I'm not being facetious. The lengths some people go to squirrel their wealth away in order to pass it onto their kids when they pass on, or before in the case of certain property purchases, amazes me. At some point adult children should be able to stand on their own two feet and fend for themselves.


----------



## Dinnie (4 Apr 2003)

*My two cents*

While you can't predict the future, I feel there is most definitely an element of bubble in house prices.  

Look at the figure historically, 33 years ago, house prices outside of Dublin were c.£3000 and a redbrick in D6 would cost you c.£4000.   Today it's Eur 150k as versus Eur 500k.

You have to ask youself, stripping out the historical variables (70's economic stagnation, one income households, high rates of interest, as versus 00's high demand, congestion avoidance premiums and low interest rates and higher pay with double incomes the norm), is it sustainable?

So long as people have the confidence, capability and willingness to pay 10 times the average salary for a house they will, but change the variables and that WILL change.  It's just a matter of when.


----------



## Bearish (4 Apr 2003)

*..*

Average mortgage payments as a percentage of take home pay are lower now than at any time in the past 40 years.

No evidence of a bubble, Dinny


----------



## rainyday (4 Apr 2003)

Bearish - Mortgage repayments aren't a good measure of house prices. Mortgage repayments are a function of house price AND interest rate AND repayment period.

When we bought our house in 1994, we went for a 20 year mortgage which was the norm at that stage. Today, most FTB's I know seem to be going for 25 or 30 year mortgages. Hence the repayment level is reduced. Also, today's historically low interest rates play a big part in keeping repayments down.


----------



## Bearish (4 Apr 2003)

*..*

Low interest rates have made houses in Ireland more affordable now than at any time before. 

Anyone waiting for a price crash is a fool. 

No one knows what the future holds for house prices. Crashes were predicted in 1998 by the central bank, and in 2001 by the ESRI. Double digit house price growth continued.

My point is that there is little evidence of a bubble.


----------



## Tommy (4 Apr 2003)

*Re: ..*

On the other hand, Alan Greenspan warned of "irrational exuberance" in the US stockmarket in 1996 and was mocked from a height for a period of several years. He has since been proved right.


----------



## Bearish (4 Apr 2003)

*..*

Keep on predicting a house price crash, or even the end of the world, and one day you will be proved right.

Did Alan Greenspan have anything to say about the state of the Irish housing market ?


----------



## rainyday (4 Apr 2003)

*Re: ..*



> Anyone waiting for a price crash is a fool.



Is this the same Bearish that I had a huge debate with 12-18 months ago when he was advising FTB's not to purchase their houses and to wait for the price drop he was expecting?


----------



## rainyday (5 Apr 2003)

*Re: ..*

[broken link removed] how Irish Times readers voted on this topic.


----------



## Jumper (7 Apr 2003)

*..*

Link doesn't work


----------



## kangaone (8 Apr 2003)

*Property*

Interest Rates are still low and may drop lower. This can only be a help.


----------



## Bearish (10 Apr 2003)

*Imposter*

Hi Rainyday,

That bearish certainly was'nt the real Bearish. As you know I have a very different view of where house prices willl go - down!


----------



## rainyday (10 Apr 2003)

*Re: Imposter*

Hi Bearish - He said they were going down too - but that was about 18 months ago!


----------



## Sarah Wellband (10 Apr 2003)

*Re: Imposter*

IMHO there are two main circumstances in which property prices will drop significantly (i.e. over 10% in a year). Firstly interest rates increasing dramatically to, say, 8%, over a very short period of time - given the behaviour of the ECB to date this is very unlikely. However people tend to cut back on luxuries, but cope, if mortgage payments rise but if they have no income they will have to look at trading down, thus the more probable (but still unlikely) scenario is a sustained increase in supply caused by rising unemployment.  If this were widescale the number of available properties would increase and it would become a buyers market especially (I think?) as there is no State aid for mortgage holders who lose their jobs. We've seen this already in the rental market - if you are trying to let a property in an estate which is over supplied you have to drop your price....

Sarah

www.rea.ie


----------



## Bearish (13 Apr 2003)

*..*

Good point Sarah. Neuther scenario is likely in the forseeable future.

I'd be worried about relying on price predictions from stockbrokers. Weren't these the same people who have been telling people to put money into equities over the past 3 years ?


----------



## fredericka (15 May 2003)

*multiple of salary loaned*

Somewhere on p1 of this debate, somebody knowledgeable claimed that the banks won't lend more than 3.75% of annual salary......wrong!  I've been offered 4.5% as a FTB when I was getting quotes from various banks- I earn around 50K and was looking to buy a 2-bed house in Dublin on my own...  In fact they offered more than I could actually afford to repay, as a single parent.


----------



## monksfield (15 May 2003)

*interest rates*

It strikes me that unnaturally low interest rates are holding the Irish property market together and people are probably right to believe that rates are likely to go lower/ stay low for the next number of years.

However people don't seem to take this a step further and ask why rates are so low and think about the consequences.

Rates in Ireland are probably 3-4% lower than they would be ex EMU.It is the exceptional weakness of the main European economies that has rates so low.Rates are even lower in the US.

Do people really believe that the level of economic activity in Ireland can be immune ?

Lots of normally bright people are now caught up in the current property 'frenzy' seduced by the easy availability of cheap money.

 I fear for those getting involved at this stage.Gearing is great when things go up but very painful when things go down (or when your property is vacant for a while).


----------



## sfag (28 May 2003)

*can you 'short' property*

buddies of mine have just paid 590,000 for a three bed semi at auction not far from lovely Dolphans Barn. Madness for sure. That house will not double in value in my lifetime. (and I'm in my thirties). They were desperate to buy. Even houses as moderate as that are going to auction. People subtract the cost of there old cheaper house and start to think in terms of the price minus the old house price to make it seem cheap. My money's on a crash but like someone else said thats an easy prediction to make. Guessing the timing is the real task.


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## N0elC (29 May 2003)

*Re: can you 'short' property*

Trying to time your purchase on something as substantial as a house is madness. No one can predict where house prices will be in five or twenty five years time.

If you can afford to, and want to buy, and don't want to keep on paying off your landlord's mortgage for him, then buy, otherwise don't. A house is for living in, not just a financial investment.

With interest rates historically low and falling, and the economy strong, there is little sign of a major wobble in the immediate term anyway.


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