Current public sentiment towards the housing market?

[room305]

Given the choice I'd always prefer to own rather than rent provided it was somewhere I was happy to live for the long term.

Apart from the tax benefits of ownership, the mortgage works as a form of enforced savings. By the time you retire you own an asset that (irrespective of its nominal worth) will provide you with free rental accomodation. It would be tough to achieve the same kind of return from your savings while renting over the period of your mortgage.

That said, I'm selling now and won't be buying until the numbers make sense again.

 

[zac]

Irish Consumer Sentiment improves in September on oil price fall
By Finfacts Team
Sep 29, 2006, 12:16

damn, irish consumers were supposed to be crippled this morning, as per hearld am, i would have thought home owners crippling would effect this number? i'd say the fudged the numbers?

 

[whizzbang]

I dont 100% agree on interest being dead money, or even on rent being dead money... Credit has been good to the ordinary man all over the last 100 years, it's enabled people to reach a certain level of wealth, by buying assets over time that they can use to generate more wealth or live in some level of independent comfort. I come from the background that you are better off owning and oweing nothing to anyone as soon as possible and am horrified at the duration of mortgages today...
If you owe nothing, then worst case, you can close the door and the landlords/banks/bertie et all can go f themselves..
Unfortunately, short of saving hard for many many years, or winning a dail seat... you'll need a mortgage to put a roof over your head and be able to plan to not worry about the roof over your head in X years. You dont really want to be past retirement and having to come up with a rent check for some landlord (or even some bank) do you? This may be an irish peasant mentality, but i dont really care.....

You dont own the house till the last payment but the banks do let you live in it while you pay it off, which is good of them
You could argue that the interest part of a mortgage plus house maintenance costs is the dead money (should be the same as the rent), not the full part of the mortgage, assuming of course the underlying asset keeps its value.

Yeah, you do have control over the rent, you can move easier. You cant paint the kitchen purple or whatever, so theres trade offs there ....

You're right, its all a mater of perspective really, how badly do you want your own place. To be honest I don't want my own place enough to lumber myself with 40 years of debt. I'll be perfectly happy to buy a place when I can do it with a 20 or 25 years mortgage. anything more than that is excessive. If by some miracle hosue prices keep going up then I guess I'm renting forever, but I dont really see that happening and I'm sure the economic cycle will bring prices down to a resonable mortgage length again. Until then I will hold off as I would feel like a total ejit for jumping on while the market is so overvalued.

I think Mortgage interest is equivalent with rent, you are paying for a service. I choose to pay to rent a place rather than rent money, thats the only difference. At the momment if I were to buy a place the money rental rate would be twice or three tiems to property rental price so I'm happy to go with the cheaper option. When these two even out more I'll consider renting money.

There are definitly benefits to owning your own place, for example, I can't buy a dog as I live in a rented apparment. But I just don't think it is worth the extra cost.

Also, I firmly believe prices cannot continue to keep rising as they are to the amount of missed out potential capital appreciation is worth the risk. Also the Capital depreciation risk grows with ever passing day.

 

[baby_tooth]

5.45

5.63 1 month back

6.12 3 month

5.55 6 month

bloomberg 10yr note.

10yrs holiding up better than 5yr.

yields dropped on 5yrs t-b
"Treasuries have rallied since late June, with the yield on the benchmark 10-year notes plunging from 5.25% on bets that slowing growth will dampen inflation pressures, allowing the Fed to cut rates in early 2007. Yields on the 10-year Treasury notes, which move inversely to prices, dipped to 4.53% on Monday, the lowest level since February"


medium term view not great!

rates probably ease which puts pressure on euro.

 

[Slicknik]

true, but then you are paying over the odds then. Also rents have been flat for the last 6 years, so I dont' expect them to change any time soon.

Same as fatmanknows I've got a 5 year fixed rate. Mine is at 3.79% so I wouldn't say I'm paying over the odds at all. And if I think that the interest will shoot up for some reason I've got the option to fix for an even longer period of time. As a tenant you have no option but paying the price that the market dictates.

And I agree, flat rents probably won't change much in the short term, but nobody can say what the rental market will look like in a couple of years time.

So in my opionion I have a lot more control over my costs than someone who's renting.

/Nik

 

[whizzbang]

Somone learned how to do that from the boards.ie thread

You have over 1000 posts in total, when you search in your profile it shows 42 threads containing posts from you. Hope that clarifies things.

snared...

any idea how you count the posts in a thread?

 

[room305]

Same as fatmanknows I've got a 5 year fixed rate. Mine is at 3.79% so I wouldn't say I'm paying over the odds at all. And if I think that the interest will shoot up for some reason I've got the option to fix for an even longer period of time. As a tenant you have no option but paying the price that the market dictates.

How much leeway did the bank give you to negotiate the 5-year fixed rate?

 

[whizzbang]

Same as fatmanknows I've got a 5 year fixed rate. Mine is at 3.79% so I wouldn't say I'm paying over the odds at all. And if I think that the interest will shoot up for some reason I've got the option to fix for an even longer period of time. As a tenant you have no option but paying the price that the market dictates.

And I agree, flat rents probably won't change much in the short term, but nobody can say what the rental market will look like in a couple of years time.

So in my opionion I have a lot more control over my costs than someone who's renting.

/Nik

Fair enough, thats a good rate, that being said it is a renters market at the moment so there are definitly benefits on that side too.

I'm a bear on the prices front so I do see rent as a way of enjoying a nice place while avoiding possible house price declines.

 

[whathome]

One thing to consider in a stagnant market is how stamp duty can lock you into a property. This is more important for the trade-up market where stamp duty can be punishing.

If you purchase a house for say €670,000, you're paying €60,000 in stamp duty. So the actual cost is €730,000 + fees. If for some reason the house doesn't work out for you as a result of:

- horrible neighbours
- barking dogs
- anti-social behaviour
- commute worse than expected
- change in personal circumstances etc

If you need to move again, you've lost €60,000
and it's even worse if you have to buy your way out of a five year fixed rate mortgage due to penalties!

Not the case if you're renting - just move at end of the lease

 

[StoppedClock]

I just had a conversation with a(n) FTB where he stated that since CPI was high this was actually going to help him in the long run as it would erode the value of his debt, however he wouldn't accept my point that he was confusing CPI with wage inflation. Just because bread, milk, oil, fags etc. goes up does not mean someone is going to pay you more (unles you work in public sector ) he insited that it did, that this is how inflation works - he hasn't had a payrise in two years but apparently that was beacuse inflation was low.
IMO this is the flipside of the argument that landlords will put up rents if interest rates go up. I guess you could call it Demand side economics, I demand more wages and I demand more rent . THe fact that there is a massive oversupply of low wage employees and rental property doesn't enter into their equation.

 

[phoenix_n]

We have an internal bulletin board in work and for the first time I just noticed someone is advertising their house for Sale. Asking to contact EA for appointments. Must be a slow market if the person is now doing the work of the EA.

 

[room305]

I just had a conversation with a(n) FTB where he stated that since CPI was high this was actually going to help him in the long run as it would erode the value of his debt, however he wouldn't accept my point that he was confusing CPI with wage inflation. Just because bread, milk, oil, fags etc. goes up does not mean someone is going to pay you more (unles you work in public sector ) he insited that it did, that this is how inflation works - he hasn't had a payrise in two years but apparently that was beacuse inflation was low.
IMO this is the flipside of the argument that landlords will put up rents if interest rates go up. I guess you could call it Demand side economics, I demand more wages and I demand more rent . THe fact that there is a massive oversupply of low wage employees and rental property doesn't enter into their equation.

I have tried until I blue in the face to explain to people that high prices are as a result of inflation, they are not inflation itself. Inflation is an increase in the monetary supply. With more money around, its purchasing power erodes, manifesting in higher prices for things, be it bread or houses.

It just seems silly to me that with hyper-inflation in house prices, people still thought inflation was low because milk prices remained static.

 

[JayDub]

Another house in Mullingar dropped 25k this week

Old price €600,000


New Price €575,000
[broken link removed]

 

[MadPad]

I just had a conversation with a(n) FTB where he stated that since CPI was high this was actually going to help him in the long run as it would erode the value of his debt, however he wouldn't accept my point that he was confusing CPI with wage inflation. Just because bread, milk, oil, fags etc. goes up does not mean someone is going to pay you more (unles you work in public sector ) he insited that it did, that this is how inflation works - he hasn't had a payrise in two years but apparently that was beacuse inflation was low.
IMO this is the flipside of the argument that landlords will put up rents if interest rates go up. I guess you could call it Demand side economics, I demand more wages and I demand more rent . THe fact that there is a massive oversupply of low wage employees and rental property doesn't enter into their equation.

Ah sure theres a correlation between the decrease in the number of pirates and global warming, anything can happen ...

http://www.venganza.org
[broken link removed]

 

[comanche]

an opinion in the uk

[broken link removed]

 

[ninsaga]

One thing to consider in a stagnant market is how stamp duty can lock you into a property. This is more important for the trade-up market where stamp duty can be punishing.

If you purchase a house for say €670,000, you're paying €60,000 in stamp duty. So the actual cost is €730,000 + fees. If for some reason the house doesn't work out for you as a result of:

- horrible neighbours
- barking dogs
- anti-social behaviour
- commute worse than expected
- change in personal circumstances etc

If you need to move again, you've lost €60,000
and it's even worse if you have to buy your way out of a five year fixed rate mortgage due to penalties!

Not the case if you're renting - just move at end of the lease

fair point but I can see with some houses rented in my area that the renters don't give a crap about the place, the house appearance & gardens etc... having said that there are as many home owners who also don't look after their properties but the ratio's one renters doing this is higher.

ninsaga

 

[whathome]

fair point but I can see with some houses rented in my area that the renters don't give a crap about the place, the house appearance & gardens etc... having said that there are as many home owners who also don't look after their properties but the ratio's one renters doing this is higher.

ninsaga

If in the above example instead of trading up, the purchaser decides to sell but hold off buying for a year or two, they could use the interest on deposit + saved mortgage payments to rent this gem in Sandymount:

[broken link removed]

Try buying that for €670,000

By renting they have no stamp duty, no maintenance fees, no insurance costs (apart from contents)
...but live in a nice house in a wonderful area while interest rates rise, watching the market fall or stagnate. If the market turns positive again, they can buy very quickly as they have nothing to sell and cash in the bank.

 

[Neffa]

If in the above example instead of trading up, the purchaser decides to sell but hold off buying for a year or two, they could use the interest on deposit + saved mortgage payments to rent this gem in Sandymount:

[broken link removed]

Try buying that for €670,000

By renting they have no stamp duty, no maintenance fees, no insurance costs (apart from contents)
...but live in a nice house in a wonderful area while interest rates rise, watching the market fall or stagnate. If the market turns positive again, they can buy very quickly as they have nothing to sell and cash in the bank.

I have to say that through all the bearish arguments on AAM, this disparity (rental vs. buying the same property) is the thing which really makes me believe that there is something very, very wrong at the heart of the "for sale" market here and that there will be a correction - either sudden or drawn-out in the coming years.

My family is doing a similar thing to the plan suggested above - in fact we are renting a house in one of the nicest areas of the city for less than half of the monthly mortgage cost were we to try to buy it.

We could not (as a rule) do this in London or other international cities which I know well. Dublin is very strange in that renting is relatively cheap by international standards but it is very expensive to buy in by international standards. Really doesn't make sense.

 

[snuffle]

Right, here's my (simplistic) view on things:
We currently rent, having decided it would be madness to pay roughly double each month to "own" the same house we currently rent.

We applied for a mortgage equal to the cost of the house we rent -over a 35 year repayment schedule -and this was over a year ago...rates have gone up since then obviously,so today's cost would actually be more than double what it would be to stay renting.

OK, so we can't make major alterations to the house,but I'm 5 minutes from work, whereas if we bought within a comfortable and maneagable price range for us we'd be facing a commute (also factor in petrol costs/wear and tear on two cars instead of one) we're currently in a neighbourhood I'd never be able to afford if I were to buy, we can change the decor/furniture as we wish within reason (and have done), we can have pets if we like -which we do - and kids too if we like, as we are not crippled by mortgage repayments and can take the hit of one wage, or alternatively move to a cheaper house which, while slightly smaller, would still be more than adequate for one or two additions to the family seeing as we currently have 3 spare bedrooms we don't use....we don't have the worry of what if the washing-machine packs up or a window falls out to budget for either...

While I know we don't own anything at the end of paying out all that rent, in the worst case scenario assuming we never manage to buy and looking at it in a purely non-emotional way(and don't slate me for being a cold greedy inheritance-ogling so-and-so, I'm not, this is purely based on simple fact, not on what I am planning for or wishing for) we will still end up with our own house(s) by the time we are of retirement age as our respective sets of parents - who of course own their properties outright - will not live to the grand old age of methuselah (more's the pity) unless there are amazing advancements in medical procedures. Being an only child means unless I rightly peeve them in the future I know the house will be left to me.

Where is the incentive to buy a house now and cripple ourselves to the point of scraping together a fiver for some beans and toast and putting off having kids til we're into our 50's and expose ourselves to the rises in rates?

The brother in law has just informed us that after coming out of his fixed term period, his weekly mortgage repayments have just jumped by €80 which means the whole family are stretched uncomfortably, while we tick merrily along with no such increases.

All the while I listen to the chit chat in work of people planning to remortgaging their house (bought less than a year ago in most cases) to finance the big wedding/jeep/holiday/whatever, with not a thought that seeing as they are already stretched as it is, an interest hike will only serve to add to the financial misery they are serving in thier terraced "townhouses" miles away from work. However, I am seen as the crazy one for refusing to buy an overpriced heap of badly constructed bricks and mortar in a new sprawling estate an hour away from work/friends/town. I am looking forward to the day when realisation dawns on the co-workers that perhaps I am not such a lunatic after all...

 

[bearishbull]

I have to say that through all the bearish arguments on AAM, this disparity (rental vs. buying the same property) is the thing which really makes me believe that there is something very, very wrong at the heart of the "for sale" market here and that there will be a correction - either sudden or drawn-out in the coming years.

My family is doing a similar thing to the plan suggested above - in fact we are renting a house in one of the nicest areas of the city for less than half of the monthly mortgage cost were we to try to buy it.

We could not (as a rule) do this in London or other international cities which I know well. Dublin is very strange in that renting is relatively cheap by international standards but it is very expensive to buy in by international standards. Really doesn't make sense.

Its a classic asset bubble. prices nearly completely detached from fundamentals (rents) fueled by low financing costs. Financing costs are now rising and borrowing capacity is being reduced so the detachment from fundamentals is being examined more by investors etc. At least in london a property (despite being considered by many to be overpriced) you can get a yield twice as good as dublin. High house prices are just pushing up costs which we should be trying to control in the ever increasingly globalised world. If house prices halved people would be too unhappy about wages being 20% less. We have a lot of rebalancing to do in the irish economy.