As a FTB how will you be affected by interest rate hikes?

[liteweight]

So if monied investors can take advantage of a crash, why can't FTB's?
Their deposit will go further and they will have a smaller mortgage!

'Monied investors' can always offer slightly more if the need arises and they think its worth it. FTB usually have a finite amount to play with. "Monied investors' have readily accessible cash/draw down cash quickly, which is always an bonus for the vendor. FTB have to wait on mortgage.

I understand what you're saying but 'monied investors' always have the upper hand. It might not be right, but it is usually the way. Also, a FTB who holds off better make sure that they can save at a rate higher than house increases, otherwise they'll be left high and dry.

We lived in London during the crash. Thankfully we were on contract there and were renting. We had friends who lost everything. In the following months, years, it was investors who bought up negative equity properties, not FTBs.

I suppose I think that FTBs should make up their mind, what do they want, a home, or an investment. If it's the former, and you can afford it, then dive in. If it's the latter or you want the best of both worlds, tread carefully, unless you're in it for the long term.

 

[whathome]

We lived in London during the crash. Thankfully we were on contract there and were renting. We had friends who lost everything. In the following months, years, it was investors who bought up negative equity properties, not FTBs

Fair point - FTB's were intimidated by the price drops so they probably didn't get in at the very bottom. By waiting however they still paid less and had smaller mortgages.

 

[thewatcher]

'Monied investors' can always offer slightly more if the need arises and they think its worth it. FTB usually have a finite amount to play with. "Monied investors' have readily accessible cash/draw down cash quickly, which is always an bonus for the vendor. FTB have to wait on mortgage.

I understand what you're saying but 'monied investors' always have the upper hand. It might not be right, but it is usually the way. Also, a FTB who holds off better make sure that they can save at a rate higher than house increases, otherwise they'll be left high and dry.

We lived in London during the crash. Thankfully we were on contract there and were renting. We had friends who lost everything. In the following months, years, it was investors who bought up negative equity properties, not FTBs.

I suppose I think that FTBs should make up their mind, what do they want, a home, or an investment. If it's the former, and you can afford it, then dive in. If it's the latter or you want the best of both worlds, tread carefully, unless you're in it for the long term.

When this all bottoms out and if there really is 275,000 empty properties sitting out there then the only people who will be buying property are the ones who are going to live in them.Real investors(and i'm not talking about the speculators who think their investors) are not going to touch residential property because the rental market is going to go into freefall.
It will take years for the market to recover,there will be far better investment opportunities than irish residential property for real investors !

 

[liteweight]

When this all bottoms out and if there really is 275,000 empty properties sitting out there then the only people who will be buying property are the ones who are going to live in them.Real investors(and i'm not talking about the speculators who think their investors) are not going to touch residential property because the rental market is going to go into freefall.
It will take years for the market to recover,there will be far better investment opportunities than irish residential property for real investors !

It doesn't matter whether you, I, the fly on the wall or the dog in the corner think they are 'real' investors or not, they will still be out there.

As for the 275,000 empty properties; presumably figures from the census, I don't know how reliable this is as a statistical analysis. It's probably the best we have though. Do you think this figure is high in relation to our population? How many empty apartment blocks were sold but not yet occupied for various reasons? An example of this is in Sandymount, where built apartments remained empty. I was interested in these (easily 100) and so rang to enquire. The answer I got was that he was keeping them to rent at a later date. He has since advertised them for rent. The point is that a figure not based on correct statistical analysis is just a figure. The census is concerned with population not occupancy and so their figures aren't an accurate measure of what's occupied or not.

I would have thought that the basic plan for any 'real' investor is to buy low, sell high.

 

[thewatcher]

It doesn't matter whether you, I, the fly on the wall or the dog in the corner think they are 'real' investors or not, they will still be out there.

Anyone with a bit of equity in their house and a reasonable wage can walk into a bank today and get an investment mortgage,they might think their investors but really their speculators there is no yield out there any more.
People on this thread saying that FTB's are wrong to think they will just be able to snap up a house when the bust comes,are correct.Lending will severly contract when the bust comes,but a bank will be far more likely to lend to someone with a cash deposit who plans to live there than a speculator,i would go as far to say that residential investment mortgages will be virtually non existent for the first few years after a bust.

As for the 275,000 empty properties; presumably figures from the census, I don't know how reliable this is as a statistical analysis. It's probably the best we have though. Do you think this figure is high in relation to our population? How many empty apartment blocks were sold but not yet occupied for various reasons? An example of this is in Sandymount, where built apartments remained empty. I was interested in these (easily 100) and so rang to enquire. The answer I got was that he was keeping them to rent at a later date. He has since advertised them for rent. The point is that a figure not based on correct statistical analysis is just a figure. The census is concerned with population not occupancy and so their figures aren't an accurate measure of what's occupied or not.

I actually find this figure incredible to believe,i mean that's 3 years worth of building,then on the other hand a friend of mine bought a house in an estate not so long ago where the builder built a load of 4 and 5 beds in a horse shoe shape sold them off and then proceeded to build a load of terrace houses in the centre and kept every one of them.Other people here fight the corner for the census figures,so i'm not going to bother.

I would have thought that the basic plan for any 'real' investor is to buy low, sell high.

Surely it's yield when it comes to property,something that is non existent in the irish market at present and as for capital appreciation after a bust this will be non-existent for a number of years.

 

[whathome]

I heard some guest (didn't catch his name) on Newstalk this evening calling for stamp duty to be abolished for FTB's to ease the burden of higher rates. I think this is a good idea - the ever increasing limits (targets) were a joke.

 

[jammacjam]

I heard some guest (didn't catch his name) on Newstalk this evening calling for stamp duty to be abolished for FTB's to ease the burden of higher rates. I think this is a good idea - the ever increasing limits (targets) were a joke.

It's not a good idea as all that will happen is that house prices will just jump again, the last time they changed the limits it just increased to this limit. The stamp duty that would have gone to the government will now go to the seller.

 

[bearishbull]

Surely it's yield when it comes to property,something that is non existent in the irish market at present and as for capital appreciation after a bust this will be non-existent for a number of years.

It should be yield, Donald Trump, one of the richest and most succesfull property investors says you should only buy residential property investments if rental yield is very good, I've heard many other property investors (not specualtors) say the same. Back in 80's and early and even late 90's many friends of my father who are now in their late 50's bought properties in Dublin(unfortunately he didnt!) as the rental yield covered the mortgage and it paid for itself. Now its rampant speculation and FTB's suffer because of it and will continue to suffer. Rental yields of less than 3% in most of dublin indicates a disconnect between price and real value. Rents must double or house prices halve to make investment look slightly attractive in Dublin on a yield basis

 

[whathome]

the last time they changed the limits it just increased to this limit.

If they abolish stamp duty for FTB's - there will be no target limits, that has to be a good thing. FTB's need all the help they can get to compete with speculators. Rising interest rates and a weakening market should also help to remove speculators.

 

[liteweight]

Surely it yield...

Yes it is yield but there are also a lot of other factors to be taken into account, such as tax and inheritance. Most of the investors I know, who were fortunate enough to be able to buy in the 70s, sold in 2001/2 when rents fell. They should have waited a little longer but that's the way it is, no one knows for sure, so you take a judgement.

Horrified by what happened to your friend (terraced houses built later..). Any buyer should look for plans of the whole site. This went on wholescale in the 70s and 80s with builders swearing this will always be a green space!

The stamp duty situation in Ireland is a disgrace IMO. Ok for investors, they've made a decision to go into that business and I can only assume they've looked into their situation properly. But for people trying to buy a home, particularly for the first time it's extortionate. I don't know what the solution is. The Gov. reduces it and builders up prices. Maybe builders should be given some kind of tax incentive to sell to FTB (as if they're not rich enough). Seeing as how the Gov. is making an absolute fortune in stamp duty, I doubt it'll be abolished but perhaps they should half the rates for a family home.

 

[macbri]

Agree that yield is the number 1 criteria for buying an investment property(who am I to argue with Donald Trump)

Thats' what makes the Irish property situation so scary-On daft website yields are averaging 2-3% with a few places like Limerick only 1.8%
Investors who bought property in the last couple of years are seeing negative returns especially in an increasing interest rate environment

Minimum yield on any property should be 5% which would indicate either rents need to double/treble or house prices will half in the future.

If your prospective ftb-rent 4 2/3 years and save majority of savings on mortgage as deposit.Prices will come down in the future,theres' no doubt about that.

The other scary thing is that theres' 275000 empty properties(15% of current housing stock).This is a massive figure coupled with the fact that projected housing starts in 2006 is 100k

 

[Raskolnikov]

Thats' what makes the Irish property situation so scary-On daft website yields are averaging 2-3% with a few places like Limerick only 1.8%

Scaremongering nonsense, the rental yield in Limerick was over 4% according to the daft report.

[broken link removed]

 

[macbri]

Afraid not mate just log in www.daft.ie

Go into q2 2006 report on left handside of website-buy to let Limerick is 2.5%,got it mixed up with south east leinster which is a lofty 1.7%.

Facts don't lie