Pat Kenny spoke to us about the issue of housing, he also had Fintan MacNamara from the landlords association on the show to look at the issues from the landlord perspective. There was a lot of consensus but some disagreement in particular about how special treatment should or shouldn’t be given to the property sector.
We were asked to take part in a segment called ‘Home Truths’ on TodayFM during the Last Word with Matt Cooper. The segment featured Karl Deeter and David Silke from the housing agency.
We were discussing the rental market and certain issues that go along with it, our main point is that there shouldn’t be a housing crisis, but that we managed to manufacture one.
The audio clip has the full segment on it.
This is an excellent piece which really spells out one of the issues that we face in the Irish housing market. The default position of NIMBY’ism in many areas (Dublin being its epicentre). Some of the conclusions or beliefs that there are absolute answers are clearly way off the mark, but the cut and thrust of the video in terms of people saying ‘no’ and some of the reasons behind it make sense.
Raising rent supplement is a tricky solution to a housing shortage for a few reasons. Firstly, if you increase purchasing power where there is scarcity it will likely serve to drive up prices generally.
Think about the following scenario, Joe RentSupplement is trying to rent a home that Jim PrivateRenter also wants, what it boils down to is private renters versus publicly funded renters, and in that mix one now has higher purchasing power.
What is the one simple thing the privately funded renter can now do? Raise their price, this is how they outbid the publicly funded renter, Joe RentSupplement is still out of a place to call home.
What are the solutions? More public housing – but perhaps not with a ‘for the rest of your life‘ tenancy agreement forming the basis of it. The other thing would be to allow increases for tenancies in situ. This last point cannot be overlooked.
Many of the new homeless come from the private rented sector. This occurs when the prices they are asked to pay are beyond their affordability, far …
We were pleased to be part of a discussion about housing which featured our own analyst Karl Deeter and Sinn Feins Eoin O’Broin to talk about housing.
Deeter was at pains to point out that tenant protection was enshrined under the idea of ‘dual ownership’ back in the 1870’s and O’Broin said that there were other things to consider, it was a measured and interesting debate.
The lesser discussed problem of rising rents will be the rising prices of the next few years, we see it as a foregone conclusion that price pressure will be upwards as long as rents are rising.
This occurs for several reasons, first is that higher rents compel renters into the purchasing space, those that can move must have sufficient savings and earnings to do so, but equally, those that can afford high rents – and to escape them via a purchase, are exactly the ones who will make that choice.
There is a tricky relationship between rents and prices, but as can be seen from the chart showing the last 25yrs there is some correlation.
What we can see is that often when rents are rising that prices then catch up, at times rents can even be falling and prices still go up – this is perhaps due to the delayed nature of the commitment to a property contract which can be long drawn out.
What you don’t see for long in that chart is rents rising …
The Sunday Independent mentioned Irish Mortgage Brokers in their article yesterday. We were making the point that being ‘middle class’ today means less than it did in the past when it comes to housing.
Karl Deeter, of Irish Mortgage Brokers, argues that today’s middle-class lack the conventional trappings of previous generations.
“Many have been badly hit with negative equity property, others are unable to save the 20pc deposit that the Central Bank demands. Their cost of living is very high, their wages haven’t improved in real terms. They’re facing huge rent hikes. They pay an awful lot of tax.
“And yet the Government thinks they will have somehow been able to save for a 20pc deposit [to buy a home]. Where do they think the money is coming from? They’re the group that have been hit hardest. They can’t rely on State help like those below them can, and they can’t avail of the sort of tax arrangements that the elites can. They’ve borne the brunt of the recession and they’re bearing the brunt of this so-called recovery.”
We were speaking on Newstalk about Central Bank rules and the impact they are having on different parts of the market. Some of the notable moments are mentioned below:
Karl Deeter of Irish Mortgage Brokers & Advisors.ie noted that high mortgage deposits are forcing people to stay in rented accommodation and fueling the housing shortage.
Deeter said: “If you’ve got people who have to come up with an extra €20,000 and they’re looking to save that, they end up renting a house for much longer than they would have. But because of that what you’re seeing is that they’re staying in a certain sector where the supply isn’t coming on board.
“It’s driving up rents. That’s almost like an additional tax which makes savings harder. It doesn’t mean that house sales have stopped or the prices aren’t rising; they are but it’s just that people aren’t borrowing to do it”.
The full story is on the Newstalk website here.
We were quoted in a this piece by Aoife Valentine of the Irish Times which was an interesting article about the situation renters face.
When discussing the rising age of first time buyers she quoted us as we mentioned that “this is something that’s become very obvious to mortgage broker Karl Deeter.
“When I started working in lending in around 2003, people in their 20s were borrowing. Nowadays, your typical applicant is no longer 24 to35, they’re 30 to 40,” he says.
New mortgage lending rules issued by the Central Bank in January say that first-time buyers may borrow only 3-and-a-half times their gross annual income, and they must save a 10 per cent deposit on the first €220,000 of the value of the property and a 20 per cent deposit on any higher value.
Deeter believes these rules are now having an effect on who gets on the property ladder.
“What the deposit rules have done is keep people in the rental sector when they otherwise would have been …