Sir, – First of all let me declare my interest – none. I bought my home at the top of the market, I am very happy with it and plan to exit advised by an undertaker, not an estate agent!
Despite my purchase history, I regard myself as reasonably intelligent, but am baffled as to the quality of thinking behind the recent Central Bank proposals. As I understand it, if I wanted to buy a €300,000 house I would need a €60,000 deposit, ignoring practicalities such as furniture. My mortgage payment would be €1,300 per month over 25 years. Assuming my rent is €650 a month – and I can save the difference versus my €1,300 mortgage – it would take me eight years to save the deposit.
The only option to buy would seem to be gifts from relatives. Is this a plot to ensure affordable housing for the existing elite, keeping down those with just hard work on their side? We need to have practical, imaginative solutions that work in the long term.
I appreciate it is easier to criticise than propose, but really, is this the best we can come up with? – Yours, etc,
AIDAN WALDRON,
Rathmines,
Dublin 6.
Sir, – “Wanted” – buy to let landlords. “Not wanted” – first-time buyers, young people, non-middle class, non-upper class, non-single people. Who are the new rules going to serve? – Yours, etc,
ANNE O’SHEA,
Ballycullen,
Dublin.
Sir, – The Central Bank of Ireland’s new proposed 20 per cent deposit requirement for all new mortgage lending will disproportionately penalise young first-time buyers. Many seasoned economic commentators have described this tightening of the rules as a return to “prudence”. Their memories are longer than mine; when I was looking for my first house more than 20 years ago, many first-time buyers availed of 90 per cent mortgages – mortgages that are now in most cases paid off. It seems the return these commentators are looking to is back to the 1970s or earlier. I, for one, don’t want to go back to that Ireland.
Most Irish people aspire to home ownership, indeed home ownership is almost essential in our society as long-term decent rental alternatives are practically unavailable for most families. A young family starting off and hoping to buy a modest home worth €150,000 will now require a deposit of €30,000. That is €30,000 without a chair to sit on, or any other furnishings. Saving €100 weekly, a young family or couple would require almost six years to save that sum. These same young couples and families have to contend with high unemployment and low incomes. Modest comfort and security for young couples and families are becoming unattainable goals.
Older generations can’t just pull the ladder of opportunity and social mobility up after us. We need to extend opportunity and the chance of home ownership to the new generation, austerity or not. – Yours, etc,
RICHARD TRAYER,
Mallow,
Co Cork.
Sir, – There is only one driver of residential property prices and that is how much someone will pay for the property. There are only two purchasers of residential properties – owner-occupiers and investors. Owner-occupiers will only ever pay what they are confident they can afford and crucially they will normally buy something they expect to stay in for years. The current proposed controls are aimed towards them. The huge growth in property prices over the last 12 months is driven by investors. Property is an asset which should attract a lower risk than something like a new business or shares because you are left with “bricks and mortar” and an income stream. Yields or your return/interest rate should be about 3-4 per cent above prevailing interest rates – a little above the bank rate to compensate for you potentially losing your capital (the price dropping compared to not losing your deposit in a bank) and lower than your return in a company (where you might make 10 per cent above the prevailing rate as you could lose everything). These principles are completely absent in the Irish property market because of our obsession with property and greed.
If you want to temper the property market, you need the Central Bank to make a rule that a bank must be happy that a mortgage is affordable at 3 per cent above current rates and allow for a 10 per cent drop in borrowers’ income for owner occupiers; apply a 90 per cent capital gains tax on residential property sales where the property is sold within four years of purchase if it is not your principal home, ie you are an investor; and ban interest-only mortgages for residential property. – Yours, etc,
EDWARD O’BOYLE,
Dublin 1.
Sir, – Following the reaction to the Central Bank’s proposed limits on mortgage lending, I despair for our nation.
Having spent six years howling about the irresponsibility of banks and the regulator, and vilifying the individuals concerned, we are now howling about the injustice of the proposed prudential regulations, demanding that banks should be allowed lend more, and claiming the governor of the Central Bank is disconnected from the plight of the people.
Roll on the next crisis. – Yours, etc,
PETER GRAY,
Carrickmines,
Dublin.