First Time Buyer Clinic Presentation


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First Time Buyer's Clinic was held on the 12th May in our offices in Shelbourne Road in Dublin. There was a fantastic turnout and highlighted to us that there is a real thirst for facts and information from people thinking of buying their first home. So we thought we would share this presentation with everybody. If you have any questions please fell free to give us a call 01 2376300 or email

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First Time Buyer Clinic Presentation

  1. 1. First Time Buyer’s Clinic, 12 th May 2011
  2. 2. Agenda-New Ireland, New Market <ul><li>Introduction </li></ul><ul><li>Economic Overview </li></ul><ul><li>Residential Overview </li></ul><ul><li>Conclusions </li></ul>
  3. 3. The Economy
  4. 4. Where are we now? Source: ESRI/KBC March, rose sharply and surprisingly to 59.5 from 50.3 . A ll time low - 39.6 July ‘08.
  5. 5. Outlook for Economy <ul><li>GNP; -2.1% in 2010, 0.25% in 2011, rising to 1.5% in 2012 </li></ul><ul><li>GDP; -1.0% in 2010, 1.5% in 2011, rising to 2.25% in 2012 </li></ul><ul><li>Export growth of 8.75% in 2010, 6% in 2011 and 5% in 2012 </li></ul><ul><li>Unemployment peaking at 14.6% in 2010 and 2011, falling slightly to in 2012 </li></ul><ul><li>Interest rates – further 50 basis points in 2011, and 75 bp in 2012 </li></ul><ul><li>Migration outflow of 120,000 in 2010 and 2011 </li></ul>
  6. 6. Residential Property Market
  7. 7. Dublin Second-hand Market Sherry FitzGerald Barometer of House Prices
  8. 8. Dublin Second-hand Market Sherry FitzGerald Barometer of House Prices <ul><li>55.8% </li></ul>
  9. 9. Ireland Second-hand Market Sherry FitzGerald Barometer of House Prices -51.1% CPI Private rents -25.5% from peak to mid 2000 levels
  10. 10. International Comparisons of Housing Recessions
  11. 11. International Comparisons of Housing Recessions
  12. 12. Affordability Barometer, First time buyer couple
  13. 13. Supply Analysis
  14. 14. Housing Completions 1970-2010
  15. 15. Housing Completions 1970-2010 LT average: 34,534 units
  16. 16. Second Hand Supply as a % of Total Private Housing Stock
  17. 17. New Supply as a % of Total Private Housing Stock
  18. 18. New and Second Hand Supply as a % of Total Private Housing Stock
  19. 19. What does all this mean for residential property? <ul><li>Established Market - Property Prices will fall during year ahead </li></ul><ul><li>Peak to trough in order of -60% </li></ul><ul><li>New Homes : Challenges remain </li></ul><ul><li>Housing demand first to recover </li></ul><ul><li>Apartments in poorly serviced locations worst hit </li></ul><ul><li>First to recover: Family homes in Dublin then other regional centres </li></ul>
  20. 21. Mortgages
  21. 22. 5 most frequently asked Mortgages questions <ul><li>Are the banks lending? </li></ul><ul><li>How long does my approval last for? </li></ul><ul><li>How much can I borrow? </li></ul><ul><li>Should I take a fixed or variable rate? </li></ul><ul><li>Why go to a broker when I can go to my bank directly? </li></ul>
  22. 23. Banks <ul><li>Are the banks lending? </li></ul><ul><li>AIB & BOI = 92% </li></ul><ul><li>ICS, EBS & KBC = 90% </li></ul><ul><li>How long does my approval last for? </li></ul><ul><li>Three to four months depending on the lender </li></ul><ul><li>KBC is the only one that offers a 4 month approval in principal </li></ul><ul><li>Loan offers then last for 3 months with all lenders </li></ul>
  23. 24. How much can I borrow? <ul><li>For single applicants = 4 to 4.5 times your basic income </li></ul><ul><li>For joint applicants = 4 times your combined income on average </li></ul><ul><li>Example </li></ul><ul><li>A single applicant, 30 years of age on a basic salary of €40,000 </li></ul><ul><li>= Can borrow between €160k to €180k </li></ul><ul><li>Joint applicants, on salaries of €40,000 and €30,000 </li></ul><ul><li>= Can borrow €300k to €325k </li></ul><ul><li>The maximum term to apply to the mortgage would be 35 years </li></ul>
  24. 25. Fixed or variable rate? <ul><li>Fixed rates </li></ul><ul><li>E.G. a 3 year fixed rate at 4.88% (AIB), your repayments are then fixed for the three year period. </li></ul><ul><li>The advantage is it gives you peace of mind and you can budget as your payments don’t move. </li></ul><ul><li>The disadvantage is that you have no flexibility in putting lump sums off or increasing your instalment to reduce the term without penalty </li></ul>
  25. 26. Fixed or variable rate? <ul><li>Variable rate </li></ul><ul><li>Your repayments can go up and down over the duration of the mortgage </li></ul><ul><li>Generally variable rates are cheaper than the fixed rates </li></ul><ul><li>You have flexibility in that you can put lump sums off or increase your monthly instalment to reduce the term without penalty </li></ul><ul><li>The disadvantage is that your repayments can change </li></ul>
  26. 27. Why deal with Sherry FitzGerald Mortgages (a broker) when I can go to a bank? <ul><li>Our Service is FREE </li></ul><ul><li>Our service saves you TIME and MONEY </li></ul><ul><li>Our service will get you the best VALUE in the market </li></ul><ul><li>Less paperwork involved-1 application form & 1 set of income documents </li></ul><ul><li>We can apply to all lenders </li></ul><ul><li>Quick turnaround time-loan approval within 3 to 5 working days </li></ul><ul><li>Independent advice on the most suitable lender, rate and product </li></ul><ul><li>We can arrange your Life Cover and House Insurance needs </li></ul>
  27. 28. Which lenders do Sherry FitzGerald Mortgages deal with?
  28. 29. Key tips when applying for a Mortgage <ul><li>Keep your current account in credit </li></ul><ul><li>Keep your credit cards in credit </li></ul><ul><li>Show evidence of regular savings </li></ul>
  29. 30. What next ? <ul><li>Leave your name and details with me this evening, I will contact you to arrange an appointment </li></ul><ul><li>The appointment will only take approx. 15 minutes and could save you thousands of Euros! </li></ul>
  30. 31. The Residential Property Market
  31. 32. The Consumer response - Property Increasing number of buyers on our books as the market continued to fall People see affordability and value – can buy properties that could not even have looked at before Things unlikely to change in the foreseeable future for lifestyle decisions need to be made –Letting not a long term solution People can decide not to buy but they cannot decide not to live somewhere - staying in rental accommodation for longer
  32. 33. 2010 <ul><li>1,000 Sales (3,500 Nationwide) </li></ul><ul><li>30% Increase on 2009 </li></ul><ul><li>88% Sold under €500k </li></ul><ul><li>53% of buyers were First Time Buyers </li></ul><ul><li>50 Houses sold over €1m </li></ul><ul><li>13 Houses sold over €2m </li></ul><ul><li>€ 400m Capital Values </li></ul><ul><li>150 Days to Sell </li></ul>
  33. 34. 2011 <ul><li>5,600 Registered Buyers </li></ul><ul><li>233 With budget €1-5m </li></ul><ul><li>12,000 Viewings </li></ul><ul><li>300 Houses Sold </li></ul><ul><li>€ 430k Average House Price </li></ul><ul><li>10% Some rents have increased </li></ul>
  34. 35. Are People Getting Finance ? YES ……Over half have finance in place and almost 20% waiting approval
  35. 36. Who is active in the Market? Mainly First Time Buyers and people trading up – 90%
  36. 37. When do our buyers say they are going to buy a property? 84% say they intend to buy within the next year – almost half in the next 6 months
  37. 38. How do our buyers feel about the choice of properties available? Half feel that the choice of properties is not improving and a further 42% say improving slightly
  38. 39. What type of property are people looking for? Majority looking for 3 or 4 bed semi detached homes 72%
  39. 40. What are these peoples biggest concerns for the Property Market for the future? (spontaneous) <ul><li>Interest rate increases </li></ul><ul><li>Price drops </li></ul><ul><li>Ending up in negative equity </li></ul><ul><li>Lack of transparency about prices </li></ul><ul><li>Selling their own property </li></ul><ul><li>Lack of supply </li></ul><ul><li>Economic uncertainty </li></ul>
  40. 41. What is stopping these people buying property at the moment? (Spontaneous) Finding the right property is the main issue followed by the price uncertainty!
  41. 42. Conclusion <ul><li>- Information gap but great opportunities emerging… </li></ul><ul><ul><li>First time buyers buying trade up product (traditional family homes) </li></ul></ul><ul><ul><li>New homes – below cost selling… </li></ul></ul><ul><ul><li>Investors remerging </li></ul></ul><ul><ul><li>Upturn overestimated – downturn overestimated? </li></ul></ul><ul><ul><li>Stay in touch </li></ul></ul><ul><ul><li>Be prepared and research </li></ul></ul>
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