Central Bank study: Rental Markets, Savings and the Accumulation of Mortgage Deposits

Brendan Burgess

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Hi 123

That is a great illustration of the points.

OK, I was exaggerating a bit on the bed-sit. Bed-sits are illegal now anyway. But you are illustrating the point I made - dropping from paying €1,500 a month rent to €800 a month. That is a big sacrifice, but probably worth it to get the deposit together.

Trading up usually works. It hasn't worked out great for those who bought in or around the peak.

Brendan
 

Gordon Gekko

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Buying an "intermediate" home to get on the property ladder is a terrible idea, given what happened to people who did that in the 2000s.

I have a major issue with this idea of people living in hovels and penury whilst saving.
 

Boyd

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I have a major issue with this idea of people living in hovels and penury whilst saving.
I agree, there is a happy medium. Simple economics that the cheaper your rent, the more you save. However, there is a quality of life issue that means diminishing returns if you try to scrimp too much of rental accommodation front.
 

Sarenco

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Hi 123

To ask a slightly provocative question, as a potential FTB do you think you are advantaged or disadvantaged by the Central Bank's rules?
 

Boyd

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Hi 123
To ask a slightly provocative question, as a potential FTB do you think you are advantaged or disadvantaged by the Central Bank's rules?
I want to go be in as little debt as possible, so the less I am allowed to borrow the better. From that perspective I think restrictions are a good idea. However, I had never planned on borrowing > 3.5 times our combined income anyway, so from that perspective they don't impact me personally (apart from what they do to the market as a whole).

My gut is that they are a good idea, if combined with increased supply. We're trying to get big enough deposit that the rules don't matter.
 

Brendan Burgess

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Great question Sarenco

I would have thought that the publicity around the rules, if not the rules themselves, have dampened down prices, so 123 is probably benefiting from them.

Brendan
 

Boyd

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I would have thought that the publicity around the rules, if not the rules themselves, have dampened down prices
Brendan
Really? http://www.thejournal.ie/daft-property-report-3004054-Oct2016/
<snip>
An analysis by the website also showed that, in the year to September, prices rose an average of 7.6% across the State. This figure comes from a 5.3% price increase in Dublin and an increase of 9.3% elsewhere.</snip>

To be honest all I hear is prices increasing, possibly at a slower rate than 2013/2014. However, 7.6% across the state is hardly a dampening effect?
 

Boyd

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I'm probably blinded by fact I don't want any rise! Why do you think they're getting such negative publicity, from all angles? CIF I can understand, but why does Joe public want to borrow 300k on 30k salary anyway?!
 

cremeegg

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Buying an "intermediate" home to get on the property ladder is a terrible idea, given what happened to people who did that in the 2000s.
Just because it didn't work for those that bought in 2006 or whenever doesn't meant it doesn't make sense now.

It can be much cheaper to buy rather than rent at the moment. A €300k mortgage at 4% is €12,000 per annum in interest. You would probably not get a similar property for that level of rent.
 

cremeegg

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I'm probably blinded by fact I don't want any rise! Why do you think they're getting such negative publicity, from all angles? CIF I can understand, but why does Joe public want to borrow 300k on 30k salary anyway?!
We don't speculate on property price moves here, however I don't think it is out of line to say that most properties being sold at the moment are going for less than their building cost plus a reasonable site cost.
 

Sarenco

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We don't speculate on property price moves here, however I don't think it is out of line to say that most properties being sold at the moment are going for less than their building cost plus a reasonable site cost.
Doesn't that rather depend on what you think is a reasonable site cost?

If we had a properly designed site value tax in place, I've no doubt that we would be in the middle of a building boom at this stage.

I suppose it all comes down to political priorities.
 

cremeegg

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Doesn't that rather depend on what you think is a reasonable site cost?
No I don't think it does. Most houses outside Dublin currently sell at less than the rebuild cost, even without any site cost.

If we had a properly designed site value tax in place, I've no doubt that we would be in the middle of a building boom at this stage.
While I think a site value tax on zoned land would be an excellent idea, I am not sure that it would put us into a boom.

I suppose it all comes down to political priorities.
Doesn't everything.
 

Sarenco

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No I don't think it does. Most houses outside Dublin currently sell at less than the rebuild cost, even without any site cost.
Is that still the case?

Average price of a 3-bed semi nationally is about €200k (per Daft; MyHome.ie); average re-built cost is about €150k (per SCSI).
 

Brendan Burgess

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FWIW I can probably wade in as an actual person that the report addresses:
  • Childless couple in 30s
  • FTBs
...
By Christmas this year, we will have 100K cash as deposit. Finding right house is then the issue. If we move to the E800 per month place in new year, it will feel less like burning money while searching for the house.

Just posting my situation as a actual comparison, not saying its right or wrong.
This post convinces me that the government probably should not spend any taxpayers' money on providing grants to First Time Buyers.

123 has made the sacrifices. He and his girlfriend have accumulated the deposit. Why should I give him some money to help him to buy a house?

Brendan
 

Delboy

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You won't give him money of your own free will...the Politicians will take your money and pass it on.
FG will do so because it will win them votes. It will be 1 less stick for FF to beat them with. It will help in their quest to get higher house prices and thus 1 day proclaim at a glitzy press conference that NAMA has turned a 'profit'. It will help push rents higher and as a lot of TD's are landlords, it's beneficial to their own pockets etc
 

phileasfogg

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As a non financial person what is the rational for 10% deposit for ftb and 20% for second time buyers who are more likely to have crèche fees/ higher rental costs/ shorter working lives. Also fg will most certainly lose my vote if grants are given to ftb at expense of families
 
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