The future of Dublin property

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
 
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
 
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!
 
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?
 
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!
 
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!
 
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!
 
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
 
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?
 
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?
 
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!
 
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?
 
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
 
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.
 
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
 
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?
 
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.
 
Observation of the ad.

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

oh, it's just me then.......
 
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.
 
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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