My views on the proposals

J

Jim2007

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There is only one way to reduce the chances of another property bubble and that is an accommodation policy that does not require every family to borrow an amount equivalent to several multiples of their income in order to have somewhere to call home.

The idea that this proposal is considered a 'reform' tells me one thing - there will be another bubble, the only difference being that if this policy is followed it will be a longer build up!
 
Jim2007 said:
There is only one way to reduce the chances of another property bubble and that is an accommodation policy that does not require every family to borrow an amount equivalent to several multiples of their income in order to have somewhere to call home.

The idea that this proposal is considered a 'reform' tells me one thing - there will be another bubble, the only difference being that if this policy is followed it will be a longer build up!
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I am sorry but this is ridiculous.

For a family to have some place to call home requires the equivalent of several man years of work.

Unless you have slave labour on building sites and cement factories etc. a home is going to cost several multiples of a years earnings. This has to be paid for in some way. A developed mortgage market allows the purchaser to spread out that cost over a long period.

Many countries do not have well developed mortgage makers, in those countries it is normal for generations of a family to live together because people cannot raise the money to build a home. Our belief that we have a housing supply crisis is based on the norm of nuclear families in their own homes.
 
cremeegg said:
I am sorry but this is ridiculous.

For a family to have some place to call home requires the equivalent of several man years of work.

Unless you have slave labour on building sites and cement factories etc. a home is going to cost several multiples of a years earnings. This has to be paid for in some way. A developed mortgage market allows the purchaser to spread out that cost over a long period.

Many countries do not have well developed mortgage makers, in those countries it is normal for generations of a family to live together because people cannot raise the money to build a home. Our belief that we have a housing supply crisis is based on the norm of nuclear families in their own homes.
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Have you not heard of renting?
 
If any of the solutions propose a move away from nuclear families owning their own home as the 'goal', will they also propose an increase in the budget for rent allowance or the state pension to cover all the retired people who now have to rent all their lives ?

Pension planning at the moment in Ireland is based on the assumption that by the time you have retired, you have paid off the mortgage and are living rent free.
 
Pension planning at the moment in Ireland is based on the assumption that by the time you have retired, you have paid off the mortgage and are living rent free.
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Excellent observation and one that I haven't seen mentioned to date as a key factor in the rent or buy debate. With the exception of the Public service virtually all of us are looking at post retirement income from defined contribution pension schemes. It is alarming how large a pot you now need to obtain a reasonable annual income from this source. there is a huge benefit to those of us who are home owners in knowing that our mortgages will be paid by retirement and our outlay post retirement will be consequently reduced. In my own case I can certainly state that when retirement comes my pension income will not be in any way sufficient to support either an ongoing mortgage or rent payment. Is this a further "unintended consequence" of the increase in long term renters? I.e. Who will supplement the rental payments for these people after they retire?
 
This is the same Central Bank that frantically lobbied the Government behind the scenes against legislating to amend the Statute of Limitations where the Supreme Court interpretation of the 6 year limitation for taking action against the banks that miss-sold financial products was resulting in the exclusion of many of the victims of these practices from getting justice.
 
dereko1969 said:
Have you not heard of renting?
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Renting means that in addition to the land, the bricks and mortar, the labour and the financing costs embedded in a house the occupier also has to pay the landlords costs and profit.

Renting may have its advantages but it is fundamentally more expensive than buying.

I also agree fully with the point made by odyssey69 and 44brendan concerning renting in retirement.
 
cremeegg said:
Renting may have its advantages but it is fundamentally more expensive than buying.
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I have to disagree! If I look at the typical Swiss family, the only point at which cost would equal that of buying is when they are raising a family, so may be 18 or 20 years out of a life time. At all other points rental costs tend to be much lower because people tend to rent accommodation that is appropriate to their needs.
 
Jim2007 said:
I have to disagree! If I look at the typical Swiss family, the only point at which cost would equal that of buying is when they are raising a family, so may be 18 or 20 years out of a life time. At all other points rental costs tend to be much lower because people tend to rent accommodation that is appropriate to their needs.
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I have to disagree with you 100%... I don't see how you statement adds up... you pay off the mortgage in 20-30 years and you can live in it for 20-30 years after that rent free... and have accumulated an asset that can cover emergencies or be passed on as an inheritance.

Even aside from asset accumulation... Are you seriously suggesting that if you start mortgage at age 30-40 and live until 80, that you will have paid less in total over your lifetime for mortgage than you would have in rent over those 40-50 years? No way.

In the short term, in any given month, if you consider rent versus mortgage, you are likely to be either paying less in rent or getting a better property for the same money - but there's a very good reason for that - see above. You have to consider all the months you wont have to pay mortgage in.

In the short term, in a situation where interest rates are high and property taxes are high... renting would be much much cheaper... but in the long run you would have to expect rents to go up to cover landlords costs.
 
Jim2007 said:
I have to disagree! If I look at the typical Swiss family, the only point at which cost would equal that of buying is when they are raising a family, so may be 18 or 20 years out of a life time. At all other points rental costs tend to be much lower because people tend to rent accommodation that is appropriate to their needs.
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I won't restate Odyssey06 point but I certainly agree with it.

You are writing from Switzerland. As I understand it the Swiss mortgage market is characterised by very conservative lending policies and Swiss house prices are much higher than in Ireland.

As an aside I firmly believe that if the CB proposals on a 20% deposit requirement is implemented in Ireland house prices will rise over the long term.
 
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