regardless of what is actually for sale at this price,
i can never understand how there are no actual decent, liveable places for sale at this price, yet it is the average price.
its just a pain that they include all property in the bag and not just break it up into categories.
sure houses are cheaper now on average, but all the ones for sale are the size of an armpit.
What a bizarre article.
So, we are supposed to assume that it costs virtually nothing to buy a house now?
Even though I am looking around and calculate I would need a jumbo 35yr mortgage with repayments more around the 25-30% mark?
Let’s probe the figures a bit more. €644 being 12.6% of net income =>total joint net income €5111, Assuming they both earn the same, that equates to €2555 each. Which is the equivalent €38000 gross (assuming no pension contributions )
Ignoring mortgage interest relief for the moment.
BOI are offering 170k over 35 years for LTV>80% at 640 per month FTB sweetener rate rolling to €663 after one year.
Total repayment assuming interest rates remain unchanged. €278184, cost of credit €108184 or 63% of the amount borrowed
Assuming mortgage interest relief of €100 a month (perhaps someone could advise a more realistic figure), they could afford to get a €744 a month mortgage. Approximately 195k over 35 years (one year fixed at 734 p/m rolling to €761 p/m). The Gross cost of credit would be 124453, then assuming relief of 100 per month for 5 years (when is this relief cut off) the net figure would be €118453 or 60.7% of the borrowed money.
Taking the €118453 figure and their monthly combined income of €5111, equating to €61332 annually.
The cost of interest as a percentage of annual income is 118453/61332 x 100 =193%
Or to put it differently the interest would cost them 1.93 years total joint net income, again assuming no interest rate increases.
Anything is affordable on a weekly/ monthly basis if you stretch the payment term out long enough. 60 year mortgages are the way to go for true affordability.
I’m single and please tell me where these houses that are 4.2 times my gross income are because they aren’t anywhere near where I work. And while I am not particularly well paid, I am paying higher rate tax.
IN short, anecdotally, these assertions are balls.
By affordable they assume you can afford to live in some crap hole…
Which is true of course… we just need to cross reference the “afforability index” with the “I’d rather be buggered than live there” index.