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phoenix_n
Guest
Correct. Its just my sentiment.
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Correct. Its just my sentiment.
Now that these houses are actually built they have gone from €850k to €750K!! As can be seen there are 4 available out of the original 5, despite being on the market since the development started.
[broken link removed]
Yes, but for many it is paper wealth only and may never be tapped into.
To make matters worse about signing up for a 35 year mortgage - inflation wont devalue the principal to the same extent that it did for our parents' generation.
I hear a lot of people say "It'll be tough enough for the first few years but by the end our repayments will be piffle in real terms." OK for our parents who borrowed, lets say 10,000 in 1973. By 1983 inflation of 10%+ had diminished the value of what they owed.
Our generation are looking at 35 year terms rather than 20/25 years and inflation of 4% rather than 15%.
People are basing their expectations of life on what their parents tell them, (to a certain degree), but it's going to be tougher.
Forget about early retirement etc with a long term mortgage, prepare for difficulty when your Mrs has babies and you miss her contributions toward the mortgage....
Lower your expectations......
Am very pessimistic - I wish it wasn't so...
I hear a lot of people say "It'll be tough enough for the first few years but by the end our repayments will be piffle in real terms." OK for our parents who borrowed, lets say 10,000 in 1973. By 1983 inflation of 10%+ had diminished the value of what they owed.
Our generation are looking at 35 year terms rather than 20/25 years and inflation of 4% rather than 15%.
People are basing their expectations of life on what their parents tell them, (to a certain degree), but it's going to be tougher.
Forget about early retirement etc with a long term mortgage, prepare for difficulty when your Mrs has babies and you miss her contributions toward the mortgage....
Lower your expectations......
Am very pessimistic - I wish it wasn't so...
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fitzy73
Guest
Hi folks - long time lurker on this thread - best one I've read on AAM. What do people think of the position this guy is in? Am I alone in thinking he is heading for a big big fall?
http://www.askaboutmoney.com/showpost.php?p=272706&postcount=8
http://www.askaboutmoney.com/showpost.php?p=272706&postcount=8
I'm inclined to agree.
The main issue at this point is affordability, it's been lauded for the last few years as a % of income rather than a multiple but it is now, from my own experience talking to friends and colleagues, stretched to breaking point.
I did another straw poll at my fiances workplace yesterday and of 11 people who have bought in the last two years 5 have already re-mortgaged and 1 has done so twice.
While some of this money was for 'lifestyle' reasons (holidays, car, redecorate etc), more often than not it was to pay off other debt including maxed credit cards and credit union loans used to pay deposits and furnish the house in the first place.
All admit difficulty making ends meet from month to month but most don't see it as a major problem since credit to cover the shortfall is easily available and is well covered by rising property prices anyway.
I honestly feel we have turned the corner at this point. In order for the market to continue upwards there must be a flow of ftbs at the bottom to facilitate this. With the rate increases to date plus the likely increases in the next few months plus the dramatic rise in heating/elec costs and the general rise in inflation signals to me that despite any desire to the contrary there is simply no more wiggle room to justify bigger mortgages for ftbs.
Bear in mind we've had years of parents providing deposits, credit unions used for deposits, 'rent-a-room' and other fictional bonuses used to fluff ftbs incomes in order to get mortgages they couldn't really afford.
I'm calling the corner now.
Watch the media over the next few months announce how the 'soft-landing' has now materialised and how property will hold steady with inflation. Then watch the tens of thousands of amateur speculators head for the door since the 'moneys been made'. Watch a hold heap of ftbs sit on the sidelines since they can't afford to buy the house they'd like to live in and there's sure as hell no reason to buy property in commuterville anymore since they won't be able to trade up profitably in a few years.
Exactly. Another contributor to this thread pointed out that because most FTBs are buying with two salaries, the ratio of house prices was more like 6-to-1 rather than 11-to-1. What is going to happen when these couples start having children in their early-mid thirties. Maybe they will all keep working and put the children in childcare (maybe they'll have to to afford the mortgage), but as I get towards that age and my friends start having babies, more and more of them want to stay at home with the children.
The idea that all these people will still have two incomes off into the future is tosh.
CelloPoint
Registered User
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That is a very good point about inflation, something I have not considered.
I share your pessimism, and at 25, I can't see myself being in Ireland in 5 years' time. For the moment though, I'm going to get as much of that borrowed European money into my bank account as possible - I won't be sticking around to help pay any of it back.
Absolutely, also watch the media switch from reporting monthly figures from the ESRI/PTSB index to annual figures so as to avoid showing a drop in the monthly figures.
So instead of announcing that house prices dropped in October by 0.2%, they will announce that annual inflation in house prices fell slightly from 15.6% to 15.4% but that prices were still up strongly over 12 months. You will have to dig to spot prices dropping initially. (listed percentages just for demonstration!)
Excellent point.
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blindjustice
Guest
The thing about our parents debt in the late 70s / early 80s is that the effects of inflation then drove both the cost of living and salaries up and in turn reducing the debt value in real terms.
We, going forward, could still see inflation a lot higher than 4% (and real inflation is probably a lot higher anyway) but might not see a similar inflation of our pay packets (thanks to globalisation) thus making the debt situation even worse for those heavy in debt.
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blindjustice
Guest
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blindjustice
Guest
about the whole globalisation thing - its a damned if we do damned if we dont
if we increase the wages to keep up the property market and stop a crash which could possible ruin our economy then our competitiveness is out the window along with thousands of jobs
if we dont increase the wages then we are lookin at a serious crash with job losses (i think alot of people have the mindset that - i bought it last year and it went up a hundred grand sure if it crashes and goes down fifty Im still winning)
another of the catch 22:
If there is no crash but a levelling off we are damning our younger brothers and sisters to cruel mortgages ZERO quality of life - why stay? family and friends is the only reason against emigration
if we increase the wages to keep up the property market and stop a crash which could possible ruin our economy then our competitiveness is out the window along with thousands of jobs
if we dont increase the wages then we are lookin at a serious crash with job losses (i think alot of people have the mindset that - i bought it last year and it went up a hundred grand sure if it crashes and goes down fifty Im still winning)
another of the catch 22:
If there is no crash but a levelling off we are damning our younger brothers and sisters to cruel mortgages ZERO quality of life - why stay? family and friends is the only reason against emigration
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phoenix_n
Guest
You are, IMO, totally correct in your sentiment with just one 'minor' flaw. The soft landing you describe is happening now with leveling prices and nervous buyers, but its actually a crash with the lead time stalling its visibility until xmas.
Do not aswell underestimate the size of the bubble.
Again, my sentiment.
Do not aswell underestimate the size of the bubble.
Again, my sentiment.
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blindjustice
Guest
in my honest opinion i believe that a soft landing is not possible
they are building 80,000plus houses a year and we already have dare i say it 275,000 houses "in the bank" empty
what happens when they dont need all the construction workers and no jobs for immirgrants we need the immirgrants to keep up the boom, our demographics wont sustain it in a few years maybe not even now if the immigrants were suddenly not allowed in
each has a knock on effect there are so many reasons for a crash
many of them could cause it independently
its too late to stop it - if everyone knew then everyone would try to get out quick! bringing it on suddenly
they are building 80,000plus houses a year and we already have dare i say it 275,000 houses "in the bank" empty
what happens when they dont need all the construction workers and no jobs for immirgrants we need the immirgrants to keep up the boom, our demographics wont sustain it in a few years maybe not even now if the immigrants were suddenly not allowed in
each has a knock on effect there are so many reasons for a crash
many of them could cause it independently
its too late to stop it - if everyone knew then everyone would try to get out quick! bringing it on suddenly
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blindjustice
Guest
the govt (if they are advised properly) will try to boost the market until at least the election is finished and if they have a clue whats going on they would call one early
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blindjustice
Guest
Why? That's hardly helpful. Some of us actually like living here; I'd prefer to get on with life - because like it or not, it goes on - and deal with reality rather than looking for blood. You just - as it happens - have to get on with it and deal with reality. The world does not stop.
Oh, and in case it's relevant I am a FTB currently "waiting". Am I happy that I had to wait? Nope, but hell, life goes on. It's not like I'm sitting at home with bitterness building up inside.
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