Are houses really unaffordable?

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cremeegg

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Note I am putting this here cause I am shooting the breeze

Second note I am not speculating about the future of house prices as prohibited by guideline 12

I came across this house for sale recently
www.daft.ie

45 Gleann Dara, Bishop O Donnell Road, Rahoon, Co. Galway is for sale on Daft.ie

45 Gleann Dara, Bishop O Donnell Road, Rahoon, Co. Galway a 4 Bed Semi-D is now for sale by Jamie Costello on Daft.ie with an asking price of €290,000
www.daft.ie www.daft.ie

and I thought you know houses are really not overly expensive

This is a 4 bed house, 15 minutes walk from the beach, 10 minutes walk from the biggest hospital in Connaught, 15 minutes walk from the university and 20 minutes walk from Galway City Centre. There are 4 excellent secondary schools within walking distance, well 2 of them are excellent, there is nothing wrong with the other 2.

It is in an ok area, there are worse estates nearby, there is a 4 bed detached over the back wall of the estate on sale for almost €1m.

All this offered for less than €300k.

With 10% deposit and a 30 year mortgage from Avant this would cost the buyer €1,261 a month fixed for 10 years. That seems affordable for a single person on the average wage. And this is a four bed in a good location, though it certainly needs a lick of paint.

This is not some unusual cheap house I think I have spotted, there are plenty of similar for sale at similar prices.
 
According to Google maps It’s 35 minutes walk to Galway city and 30 minutes to salthill but your point stands.
 
You'd get a 4 bed house in Carlow town for less then 300k. An hour to Heuston by train or to Tallaght by car. Great if you can work from home part of the time as well. Similar prices in places like Kilkenny or Port Laoise

A lot of the expensive properties are confined to Dublin, Cork and places like Kinsale
 
It's not a great estate.

90 sqm is tiny for 4 bedrooms.

It is 35 mins walk to Eyre Square.

However, given that I know somebody who paid 400k for a 3-bed semi about 2km away in Newcastlw, it's not bad value.
 
With respect to the people of Carlow I don't think they want everybody who cannot get a decent mortgage for elsewhere inhabiting their area thereby jacking up the price of housing there. So what if you can get to Tallaght in an hour! You can scan the weekend Property Pages too and no doubt you'll find a house within a 100 metres of the Cork/Dublin railway line in Limerick Junction or elsewhere at knockdown price with an outside toilet described by Lisney as a period piece and the crumbling ruin referred to as a property of potential. Turn on your television and somebody is scouring rural Ireland with property for sale with just rising damp, falling chimneys, rotting windows, floorboards bending like thin wire and three quarters of an acre that you'd need the army to keep in trim.

You're working from home mostly so Ireland is your oyster. I think not. A few years ago decentralisation started in the Civil Service. Many sold their homes in Dublin and bought in the provinces with a leftover amount equivalent to a good win in the Lotto. All was grand until their children wanted to go to university in UCD, Trinity or wherever. Suddenly, the "Lotto" winners had to pay dearly for accommodation for their loved ones and their huge leftover amount started to take a kamikaze dive and suddenly even the most resentful Dublin Blow In became The Greatest Lover of Dublin.

These houses at knock-down prices are only television entertainment and/or folly for the uninitiated. It's not money well spent; in fact it can be compared to my sallies into AIB and Eircom shares.

There are better ways to solve the nation's failure to provide proper housing ownership for decent people but the financial institutions are doing everything they can to avoid these. I never thought I'd get politically involved in the housing situation, but our main political parties have failed us and perhaps it's time to give others a chance? - I never thought I'd say that.
 
Leper said:
With respect to the people of Carlow I don't think they want everybody who cannot get a decent mortgage for elsewhere inhabiting their area thereby jacking up the price of housing there. So what if you can get to Tallaght in an hour! You can scan the weekend Property Pages too and no doubt you'll find a house within a 100 metres of the Cork/Dublin railway line in Limerick Junction or elsewhere at knockdown price with an outside toilet described by Lisney as a period piece and the crumbling ruin referred to as a property of potential. Turn on your television and somebody is scouring rural Ireland with property for sale with just rising damp, falling chimneys, rotting windows, floorboards bending like thin wire and three quarters of an acre that you'd need the army to keep in trim.

You're working from home mostly so Ireland is your oyster. I think not. A few years ago decentralisation started in the Civil Service. Many sold their homes in Dublin and bought in the provinces with a leftover amount equivalent to a good win in the Lotto. All was grand until their children wanted to go to university in UCD, Trinity or wherever. Suddenly, the "Lotto" winners had to pay dearly for accommodation for their loved ones and their huge leftover amount started to take a kamikaze dive and suddenly even the most resentful Dublin Blow In became The Greatest Lover of Dublin.

These houses at knock-down prices are only television entertainment and/or folly for the uninitiated. It's not money well spent; in fact it can be compared to my sallies into AIB and Eircom shares.

There are better ways to solve the nation's failure to provide proper housing ownership for decent people but the financial institutions are doing everything they can to avoid these. I never thought I'd get politically involved in the housing situation, but our main political parties have failed us and perhaps it's time to give others a chance? - I never thought I'd say that.
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A very Dublin focussed view

And yet, Carlow County Council had a big supplement in the SINDO recently, trying to attract people to come and live in Carlow on the basis that it's a great place to commute and work remotely from.

I'm not talking about run down houses in Carlow. Below is an example
www.daft.ie

2 Rath Abhainn, Kilkenny Road, Carlow Town, Co. Carlow is for sale on Daft.ie

2 Rath Abhainn, Kilkenny Road, Carlow Town, Co. Carlow a 4 Bed Detached is now for sale by Thomas Byrne on Daft.ie with an asking price of €300,000
www.daft.ie www.daft.ie

It's a University town with 2 other University campuses within a 1 hr drive. Vast majority of kids in Ireland don't got to College in Dublin

I recently sold a house in a rural Cork town for just over €200k. standard 3 bed terraced house, 1930s build. Bought by a young family relocating from Dublin who plan to extend and renovate for a cost of around €180k. They've have a 3 bedroom, modern updated house with offstreet parking within walking distance of primary and secondry schools in a good country town and a bus ride or train ride away from 2 universities.

there is a life outside Newlands Cross :)
 
Leper said:
There are better ways to solve the nation's failure to provide proper housing ownership for decent people but the financial institutions are doing everything they can to avoid these.
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It's really nothing to do with the financial institutions. There's a housing affordability problem across the developed world and it's a result of the decisions that were made after the 2008 crash. Unless the "others" are going to massively increase property taxes, reduce taxes on builders and developers, take on the local authorities and every planning office in the country and give tax incentives for people to work in the construction sector then they are going to achieve absolutely nothing. Their current plans to reduce taxes on wealth and increase taxes on labour will certainly make things worse.

@cremeegg, I agree with your general point. There are plenty of 3 bedroom houses in South Dublin (Churchtown, Rathfarnham etc) for under €400k. They'll be on the small side and will need some decorating but if a young couple use the rent a room scheme they'll get a house with a net cost of around €1000-€1200 a month.
 
Not Dublin focussed. The property availability through getting a mortgage in Ireland has been mismanaged for decades. Like what has been said in other threads Eileen the nurse marrying Paddy the teacher will see them rearing a family from rented accommodation. Sooner, but probably later if they are lucky they’ll be able to buy a two bedroom apartment on the seventh floor where on a clear day they’ll see the ground outside. Dublin is not going to get any smaller, neither is it going to become more housing friendly. The greater Dublin area has half our population living there. It will never be any different. Propaganda Signs outside the building of eight or nine housing developments indicating “Building for Irelands Future” will hold little respect come next year’s local elections or the following year’s general election where the people likely will vote as they never voted before. I don’t this say lightly.

. . . And humorously imagine rearing a family in a county that probably will never win an All Ireland. Come on the Dubs!
 
I have suggested that houses are not expensive in Ireland

A four bed semi 2.7 km from Eyre Square in Galway, closer than that to; the beach, the Hospital and the University for a deposit of €29,000 and mortgage repayments of €1,261

The stereotypical 'a nurse and a guard' could easily afford that.

We don't have the housing affordability problem we tell ourselves we have.
 
In the example there are 4 bedrooms, landing, hot press and bathroom in 42sqm

You'd want to be a contortionist to live in the single rooms - about 50 sq ft each.
 
One of the problems touted is that the cost of building houses is too high relative to the amount of finance that borrowers can typically raise. There’s a disconnect that’s difficult to bridge.

I don’t know whether this is true or not but it’s often offered as justification of the need for investment funds to provide building capital and that we should all therefore be very grateful because without it, there would be no building and we’d all be living in tents etc etc.

The result of course is that properties are offered for rental, not for sale. The problem isn’t as acute outside Dublin but it’s a concerning trend. Those seeking to live in Dublin are reliant on an expensive and largely unregulated rental market.

If I was starting my working life again, I think I’d be looking abroad.
 
Salvadore said:
One of the problems touted is that the cost of building houses is too high relative to the amount of finance that borrowers can typically raise. There’s a disconnect that’s difficult to bridge.
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Yep, investment money is chasing land, pushing up prices. Lumber, Iron and just about everything else that goes into a house is a traded commodity, all of which have been pushed up in price by the increased money supply.
Salvadore said:
I don’t know whether this is true or not but it’s often offered as justification of the need for investment funds to provide building capital and that we should all therefore be very grateful because without it, there would be no building and we’d all be living in tents etc etc.
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In an inflated capital market they are required but the underlying issue is the relative devaluation of labour.
Salvadore said:
The result of course is that properties are offered for rental, not for sale. The problem isn’t as acute outside Dublin but it’s a concerning trend. Those seeking to live in Dublin are reliant on an expensive and largely unregulated rental market.
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I don't think it matters in the broader view whether a housing unit is rented out of sold.

Salvadore said:
If I was starting my working life again, I think I’d be looking abroad.
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It's an international problem so the grass may not be greener.
 
So if there was an increase in bond market yields and international investment moved away from property, what then?

Would building just cease because there’s no other source of funding? Would wages reduce? What about the cost of materials?
 
Salvadore said:
So if there was an increase in bond market yields and international investment moved away from property, what then?

Would building just cease because there’s no other source of funding? Would wages reduce? What about the cost of materials?
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There would be fewer institutional buyers hovering up existing properties.
Land prices would reduce.
Materials would also probably reduce as the speculative capital would also move away from those commodities.
 
Guys, Some lovely arguments in there and well done with the mind games. Let's talk bottom line:-
1. Most property is overpriced
2. Proper mortgages are difficult to get.

Anything else is only talk and you can talk forever. Ireland Ltd has got to find a way to build more decent homes (not just starter homes or apartments). The financial institutions can play their part too, they are profit making bodies so let them give decent mortgages. Other than these happening Eileen the Nurse and Paddy the Guard can aspire to only owning a plastic house with Lego written on little dots.
 
Leper said:
Guys, Some lovely arguments in there and well done with the mind games. Let's talk bottom line:-
1. Most property is overpriced
2. Proper mortgages are difficult to get.

Anything else is only talk and you can talk forever. Ireland Ltd has got to find a way to build more decent homes (not just starter homes or apartments). The financial institutions can play their part too, they are profit making bodies so let them give decent mortgages. Other than these happening Eileen the Nurse and Paddy the Guard can aspire to only owning a plastic house with Lego written on little dots.
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That post sums up the problem with our approach to the housing cost problems we have.
You are failing to grasp why property is over priced.
I'll quote Ann Pettifor again:

"The idea that house prices are determined by supply and demand is an infantile view of how the market works. Asset prices in Ireland are very high, because there is a wall of money looking for somewhere safe to land — and property is regarded as a safe asset.

“That’s what is hiking prices in Ireland — not supply and demand. You could cover all your land in concrete and prices will still rise, so long as mainly foreign capital is free to invest in finite Irish assets."

No understanding that doesn't change it.

There are no houses unsold so the Banks giving out more money will not house one extra person.
 
Tying up so much of our capital and prospective wealth in property (and particularly family homes) is ultimately counterproductive.

Our house has almost doubled in "value" in 5 years. Neighbours are thrilled as they now feel 6 figures richer. I think it's absurd that we now could no longer afford to buy our own house! No chance at all for most families, never mind a single person.

As @Purple has often said, this is Monopoly money "wealth". In our net worth calculations, we count the mortgage loan but not the house value, because we are not millionaires if we are dependent on the asset for our daily living.

Apart from the small task of changing the mindset of an entire nation(!), we could have: property tax based on property values +/- square footage, greatly reduced CAT thresholds for inheritance (so property isn't hoarded as parting gifts), financial incentives for people to downsize, better options for older people (e.g. retirement villages), etc.
 
Salvadore said:
How would that provide any more houses though if international investors are the real culprits?
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There are to issues;
1. The demand for housing amongst the general population is higher than the supply of housing.
2. Housing is very expensive.

Problem one is not the main driver of problem 2. That wall of international capital is. The fact that we have ridiculously low levels of property tax makes it more attractive as an investment. Therefore building more houses will not drive down the cost of housing. A higher interest rate environment makes investments in other asset classes more attractive so that might help.
 
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