I have noticed that there is a hugh shortage in rental accommodation, because young people whom normally would have bought are now flooding the rental market.So new build purchasers aren't in a possition to buy!
the problem with supply is not a new build problem but more a glut in sellers. people are holding on at all cost, but a slight change in interest rates is the step on the fingers they need(if they sell now the might recoup some loss) The pain on the way is without doubt interest rates!
..it will be interesting to finally see how many shares the govt will reduce; there has to be numbers out there with these estimates: initial sales price has to be greater than a nominal 1€ to allow investment funds to buy in, normally these funds can't invest in penny stocks..
..AIB is in the works for a partial sell, the stress test, a reduction of shares, & financial results pending March 2015, looks like a sale of 25-30% after financial results are given..the housing shortage is getting real, availability of housing from last year is down significantly: 40k units to ~ 25k units : aib & boi are recovering faster than planned..when aib is partially sold off, it will be at least in a price range of +1€; which would require the govt to cancel shares: bank is currently valuing AIB at 11b , this could change after results are posted March 2015, & further reductions of distressed housing inventory: looking at another 6 to 7 months ahead; by then bank could be looking at further valuation of say 13 to 15b before the shares go to market; and these shares will have heavy demand..
The latest CSO House Price Index (HPI) shows that prices at the end of August were 41% off their peak. This increases the buffer in banks’ mortgage provisions, with Bank of Ireland and PTSB sticking with their 55% HPI assumption at the interim stage, ahead of the ECB stress tests, while Allied Irish Banks moved to 52%. The two large banks reveal that each 1% move in the index is worth up to €40m. We expect banks to review their assumptions at the FY 2014 stage.
That's an excellent point that you made about civil servants, and a very correct one. Civil servants traditionally could afford a house in a very decent area, but no more. And yes it seems to be win win for the banks. I'm not sure when the rates will rise, but I'm sure they will. ECB is currently at .25% I think, and our banks are charging 6% to first time buyers. That's some mark up.
It all confuses me a little, I think I know how things are shaping up as I look at the big picture with logic. But these panic crazed buyers aren't using logic. FFS, I know people getting into bidding wars, and then getting a credit union loan to buy beds, cookers, ect. Crazy is an understatement.
Nobody wants to hear this because it would seem daft to say property is overpriced now!But everything about the average buyer(20/30yr olds) has completely changed, and average house values have to follow.(new entry garda/nurse/teachers/civil servants salaries are half that of pre-Croke park)
THIS is a banking post and even with the above property negativity , the banks cant loose because turnover will increase ,as interest rate hikes ,absorb pay rises for the foreseeable future.
I'm not confident on the property market and how it will affect the banks this time. You did say that the current housing situation isn't sustainable, and I 100% agree with you. What a lot of people don't seem to realise is, there has been an awful lot of apartment blocks sold over the last few years, really bumping the market. They've been sold in large lots, and that's what kick started the housing figures and frightened first time buyers into making their move. However, the blocks where sold to overseas cash investors (Americans) they seem to want some security elsewhere in case the dollar drops. That's my opinion on the sudden panic. Money follows money, but not always for the right reasons.
I know a couple that bought their first home last year in North Dublin. I thought they overpaid at the time (considering their mortgage repayments and future rate increases) but they have recently been bragging about how the value has risen by €70/80k in the last year! Now they aren't investors and won't be selling their house, so the value doesn't mean much, but they're currently very happy paying their 6% mortgage. Make of that what you will.? But personally, that type of thing scares the life out of me.
Another thing on property, some people are saying "yea the prices have gone up a lot in the last year, but they're still cheaper than 2007"..... WTF, no they're not! That's what the media is saying. But look at mortgage repayments. In 2006/2007 you could get tracker mortgages with very low rates 1.5/2%, I think? Now you get 6% unless your LTV ratio is under 50% of the valued price. So 5.5/6% with rises inevitable in the life of the mortgage. Fools are paying more now than they where in the boom. More of their salaries. Absolute idiots. It's happening again. Thoughts please?
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