FTBs... what can they afford?

Prompted by Landlord and esselte on another thread and bored with the rain, I thought I’d look at what the median earning power of FTBs is.

So I went here: cso.ie/px/pxeirestat/Statire … able=NSA15

Disappointingly, it only has the figures for 2007. It is, as far as I am aware, the only source of median wages in Ireland (any other source gratefully received).

Why FTBs? Because they are an enabler of other movement in the housing market - new entrants release existing homeowners to move. Movement is what makes a property market.

Why median? Because averages (means) are too easily skewed by high earners. Money is peculiar that way, it is not capped to the upside. NN Taleb:

As the net worth rises, the average rises too. The median is only slightly changed by the addition of a single person.

This is from the average years worked, both male&female:

[code]Years Hourly Hours/week Weeks/year Median wage Average
<5 12.25 37.5 52 23887.5 28743
5to9 15.1 37.5 52 29445 35022
10to19 17.47 37.5 52 34066.5 41125.5
20to29 18.6 37.5 52 36270 45318
30+ 20 37.5 52 39000 48106.5

All 16.29 37.5 52 31765.5 39156[/code]

I reckon the typical FTB will have worked 5-9 years before buying. Others may differ. You may put your own affordability metric on the salary.

PS I’m not convinced that 37.5 is the right hours to use…

I’m not convinced.

The argument that new entrants enable existing homeowners to move only applies if the new entrants (i.e. the FTBs) actually choose to purchase a house that is currently being occupied.

But in this country (see below) we’ve got 200,000 empties available to anyone who’s got the cash to pay for what they are worth.

I’d say that there is a higher likelihood that FTBs will tend to move to houses that are currently empty than which are currently occupied. i.e. they fill holes, but holes which are already filled stay plugged.
They don’t essentially create a market avalanche anymore (unlike in a situation where you have a housing shortage) but instead just take up underutilized unwanted capacity.

With the effects of emmigration there will be even more empties than what we expect in future years (to 2016 is my guess - that’s my personal estimate of the date of turning - aside from a Penguin event :angry: )

Especially those holes which are filled by those living in Negative Equity apartments that they can’t now flip to our new FTBs of this awakening decade who I hope know just a little better than before.

Other basis:
Firstly, FTBs are either currently renting or staying with relatives, friends or family for low or no rent as the case may be.
Ireland has some 300,000 empties.
I’m not sure if this is holiday homes or not but let’s be generous and take out 100,000 houses due to holiday homes (and other non-accessible properties).

Then it comes down to the following,
That there are 200,000 empties needing to be filled by anyone who wants to fill them.

they can afford… to wait.


Well I’m a FTB and my mortgage approval allows me to buy either a rabbit hutch in the Dublin area or a three-bed semi an hour away from Dublin.

FTB working class suburb/in most towns outside Dublin area E100 - E150k
FTB middle class suburb/detached house in towns outside Dublin area - E150 - E250k

Average house prices in the E150k region.

My disposable income has been hit hard in the last 12-24 months and I just got a call about renewing my health insurance and they’re looking to increase it by 18% on last year. My overall salary hasn’t changed, so its all tax, increases on insurances, etc.

The disposable income is the clincher and by the looks of things it isn’t getting any better. With interest rates on the rise, the purchasing power of FTBs is going to be hit further.

wii4miinow, I get your point about FTBs and empties, but a lot of empties I see are not FTB properties. You can argue that some will be bought/sold cash for what they’re worth, but I would suspect your typical FTB will not be in a financial position to run a 3000+sq ft McMansion if they were giving it away.

DP joked about being able to afford to wait, but its true. So much uncertainty (nevermind denial, fear, desperation, etc) will make FTBs sit on the fence longer… with lots of anecdotal stories of people getting burned to chew on and little credit available I reckon they’ll be happy with their view from fence for a good while to come.

To answer your question, what can they afford? €65k… I just plucked that figure out of my a… the sky.

Some can afford to be oblivious to the state of the property market…
boards.ie/vbulletin/showthre … 2056314629

I thought everyone in the country had had some cop-on forced upon them by the bust, but clearly that is not the case.

He is a builders-dream of a FTB - green as grass. I only hope he listens to the good advice that he is being given.

Most FTBs don’t buy property based on one income (I would assume). Shouldn’t you base maximum affordability on two incomes?

Bloody double incomers. Buying all the houses I’ve been interested in so far.

I am an FTB, entirely solo, I have decent approval in principle, but I’m targeting no more than 35% of takehome at 5% for repayments, which leaves me about 50k off the houses I’ve been interested in once the couples get involved.

It also makes renting somewhere nice prohibitively expensive, though there is some hope in this area.

Regarding the 200,000 empties - most of them are in small country towns/villages that no FTB will ever want to live in. A lot of them will eventually have to be razed to the ground. XX

Nah, put sheep or better still, goats in the estates… they’ll be grazed to the ground…

So that would make them ‘goats estates’. :-GC

:smiley: Don’t let jmc hear you with that Lisp…

…only if the were (lambda (x y) (concatenate x y ) '(“goats” “estates”))

(L)ots of (I)nsidiously (S)tupid (P)aretheses…