I beg to differ. People spend tens of thousands on cars, which are heavily depreciating assets. It should be a bonus if the house you buy increases in value, but first & foremost it's about putting a roof over your head.
Bank of Mum and Dad
- Thread starter Purple
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RetirementPlan
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It's the way the world works because that's how we've set up the world to work. It might be time to think about whether this is the appropriate way for the world to work. There is something toxic in the political pandering to home owners, with every policy designed to keep house prices rising, because home owners are great voters. The younger generation (and perhaps not so young now, into the 40s in some cases) are paying the price for this.
The car can be a lifestyle choice and I know numerous people who have purchased cars that are way in excess of their needs in practical terms and the repayments plus the rent would more than service an 80% mortgage. They have very good jobs so the ability to get a mortgage would not be a problem for them. That's a lifestyle choice. Each to their own. I am talking about provincial Ireland.
Anyhow looks like property & rents will keep rising for the next few years according to KPMG analysis undertaken for Dublin City Council. KPMG expect property price growth between now and 2028 to be 26%, while median income growth over this timeframe is forecast at 23.5%.
Average Rents however are expected to rise by 38%, or to over €2600 per month from €1885 currently.
Average Rents however are expected to rise by 38%, or to over €2600 per month from €1885 currently.
Median house price Dublin €477k - KPMG Analytics - two people save €50k each by 30, require mortgage €377k , divided by 3.5 ( the multiple used by banks on joint income) = €107.7k required joint income / €53.8k per individual. While still high enough , think this is achievable for many by 30 who say have 7/8 years work experience behind them.
Median income in Dublin , according to the KPMG report for 2021 is €54.9k
Median income in Dublin , according to the KPMG report for 2021 is €54.9k
Its a lot more complicated than that. Have you tried saving 50k by the age of 30 when starting out on your career and paying nearly two grand a month in rent?
Factor in that you are assuming no woman decides to have children before the age of 30.
The median income for Dublin is 54k. The median income for 30 year old in Dublin is less than 54k.
There are thousands of people like nurses, teachers, guards, retail workers, transport workers, hospitality workers who are not earning anywhere near that.
Even without the 'bank of mum and dad', the spare room of mum and dad is coming into play no?
Many people in those positions in their 20s in Dublin are still at home. They're not paying rent they are saving.
Not sure how you could equalise that advantage.
No help. I'd been working summers, Easters and mid terms since I was 14, usually around 60 hours a week. I'd been working fulltime since I was 17 and had started my apprenticeship, usually around 60-70 hours a week. Therefore I had saved quite a bit. When I read about the pending drop in interest rates I knew there'd be a corresponding rise in prices so I sold my car and bought the most expensive place I could afford. That happened to be a small 2 bed in Dublin city centre.
Well Done Purple (this is not the first time I've commended you on your early achievements). Purple was not alone in the general thinking back then. We bought our first house for €9175.00 (3 bed semi) - age 21. The mortgage was "made available" to us 12 months after the house was completed and we were forced by the mortgage institution (AIB) to take out a Bridging Loan from completion. Whatever way you look at this it added a year to your repayments and was a form of legal extortion used by all the banks in Ireland. I'm not going to mention interest rates rising to 19.75% where many now would not believe me, but rates like that were not unusual and I have the Home Loan summaries to prove it. I look through them occasionally and they keep me pretty well grounded.
Most people back then (70's) were married by the time they reached their 26th birthday. These days the average blushing groom and bride would be nearer 40. Purple is one of many people who bought their first property in their early 20's. Like I already said, I commend his achievement, but he was only one of many. Most of people back then left school at 17/18 and went immediately to work wherever they could find it. In my case, it was the UK where I helped make the M1 a safer place for motorists by painting the amber on crash barriers.
But, we were good people back then. You learned mainly from experience and didn't have your mind influenced to any great extent at 3rd Level. Most of us could think clearly earlier than what I think people do nowadays.
Times were different then, much different. I'm not saying they were better times because they weren't. But, people had priorities and when the first house was bought it was empty except for a bed, cooker and a few necessities. Female Civil/Public servants had to give up their jobs on marriage (think about this for a while) - try that now and there'd be a revolution. Do I want to return to those times - No Way!
Jasus Leper, I'm not as old as you!
Most of my classmates did go to third level. I was an outlier.
I think it was easier then (the early 90's) than it is now. If you has a half decent job and worked hard you had a reasonable expectation of buying a house.
It's also worth pointing out that the absolutely best time to buy a house is when interest rates are as high as possible so you were very lucky to buy when you did. Not only does it mean capital prices (the price of houses) are depressed but inflation will also be high and so will eat big chunks out of the real cost of your mortgage each year. Remember that inflation compounds, interest rates don't.
I don't think I has or have a stronger work ethic than people in their 20's have now. I was living at home and my mother was feeding me and washing my clothes. It was easy to work 6-6.5 days a week. There are plenty of people in college working 20-30 hours a week on top of studying. That's much harder.
I also don't think I was an smarter or more grown up. I don't think I was more worldly or mature.
On your second point you are underselling yourself. In today's terms you were ahead of the posse. No molly-coddling for young Purple. And it seems to have stood you in good stead.
So, I should be delighted AIB Home Loans Dept increased my interest rate almost willy-nilly reaching a max of 19.75% where my monthly mortgage cost was actually more than my take home pay during the period. I think you got that one wrong. Even AIB refused point blank to increase the term of the loan. Today we're not too far short of the 100 year mortgage (I read on this forum where a guy has a 35 year mortgage).
There are so many ifs and buts it's a wonder that anybody can get a mortgage these days; it's also a wonder that they can get jobs (such are the demands now on the employer). When I see intelligent landlords (on guaranteed good income) on this forum getting out of the letting market because of all the obstacles strewn in their way, it sets alarm bells ringing in my ears.
I don't have all the answers to Ireland's housing problems, but if somebody doesn't come up with them soon the situation will be irretrievable.
Multi-Nationals have been around for nigh on 30 years; some of us have managed to raise children to adulthood in that time!
I remember those days too; no sooner had you figured out how to re-align your budget, then the next increase was announced days later.
I cried when my 3 year old son was delighted he could pick two packets of biscuits at the supermarket because it was Christmas.
Would I wish those days on anyone? No I flipping well would not.
Stuff the 'character' building rubbish; everyone needs a home.
There has to be a better way - it's surely not beyond our wit and intelligence to figure out how to do it.
Edit to add: it's my money, I earned it. If I choose to pass some on now to my children, that's my perogative.
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Thinking about this again... I think when people talk about the Bank of Mum and Dad they are not talking about inheritance.
They mean living parents helping adult kids with deposits for houses or cars or living rent free. So they are helping them with earned income or pension lump sums that kind of thing.
Im not convinced the demographics stack up in the last 10 years for it to be inheritances impacting property prices and by the time both parents pass on the adult kids are usually already established on the property market - if they are going to do so independently. If they are not then it is common for adult child to stay in the house.
With the inheritance, they are trading up and renovating, not directly pushing up prices for FTBs.
They mean living parents helping adult kids with deposits for houses or cars or living rent free. So they are helping them with earned income or pension lump sums that kind of thing.
Im not convinced the demographics stack up in the last 10 years for it to be inheritances impacting property prices and by the time both parents pass on the adult kids are usually already established on the property market - if they are going to do so independently. If they are not then it is common for adult child to stay in the house.
With the inheritance, they are trading up and renovating, not directly pushing up prices for FTBs.
Gordon Gekko
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I think it definitely has an impact.
To the point where if you’re looking at a place there can nearly always be someone with that additional firepower.
Very hard on someone with no support and simple mortgage approval who comes up against someone with support.
Especially as when, for example, parents give their kids €50k to help out, there tends to be more in the tank if a battle ensues.
To the point where if you’re looking at a place there can nearly always be someone with that additional firepower.
Very hard on someone with no support and simple mortgage approval who comes up against someone with support.
Especially as when, for example, parents give their kids €50k to help out, there tends to be more in the tank if a battle ensues.
And Granny will pop her clogs soon and leave a few bob and when the parents retire they'll get their lump sum form a State pension they haven't paid for or a private pension inflated by that same pesky quantitative easing. Then when the young home owner is in their 50's their parents will die and the real impact of intergenerational wealth will be felt. This problem isn't going away and the deeper it takes root the harder it will be to deal with.
That's the thing though, if you are talking about money in property and pensions/investments then you didn't earn it. Your assets have been grossly inflated by the political decisions which lead to vast amounts of money being created out of thin air to replace everyone's savings after the banks went bust and to generally maintain the financial markets. Capital growth has outstripped real wage growth by a factor of ten or more in just about every country in the developed world since 2008. Do you think that just happened all by itself?
Gordon Gekko
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Yes, I did, have, and do.
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