But there is another problem which without managment and indeed government intervention could drive down property values even further and have a disastrous effect on thousands of home owners.

The banks are stating that mortgage arrears are presently running at just over 4% based on a 90 day roll-over period, this figure may be some way from the truth.  It does not include mortgage holders who have entered into agreements with their lenders and have taken a payment holiday and/or gone interest only.

When those mortgage holders come to the end of their payment holiday and/or interest only period, then what?  In most cases their employment and income status will have stayed the same and in some cases deteriorated even further.

What plan’s, if any, are being made by the banks and government to rescue these troubled mortgage holders?

The recent decision by the mortgage lender EBS to reduce the amount that they will lend to mortgage applicants did not come as a great surprise and other lenders may follow their lead. The obvious implication here is that buyers will be able to borrow less so this will increase downward pressure on house prices. How did we get here?

 In 1982, a couple on a combined salary of  IR£8,500.00 could get a mortgage of IR£18,000.00, in 2006, on the same salary they would have been approved for between €51,000 and €59,500.  The differences were caused by the banks lending criteria. In 1982 mortgage approval was based on three times the main earner and half the supporting salary and for a maximum term of 20 years. In the ensuing years banks changed their lending criteria in line with their motivational ethos of profit.  Lending criteria increased  in some instances to seven times combined salaries and over a maximum term of 40 years. The profits to be made were enormous.

 Now that we are in a crisis the banks have been drawing back slowly from their reckless lending practises.  But this poses more problems as borrowers are aproved for less, a good thing in our view as we want our clients to borrow less and buy better.  But what about the vendor, who has seen their property values tumble and are set to see them decrease further due to this tightening of lending criteria. 

 There may be more bad news on the horizon for vendors, as the next adjustment to lending criteria could  see the maximum mortgage term being reduced from 40 years to 35 or even 30 years. This reduction in term will further reduce borrowers purchasing power and therefore will have a further negative knock on effect on property prices.

 Financial Institutions are reducing the amount you can borrow, but EBS are also telling you where you can buy and live. Should other lenders follow, this could give rise to other problems. Remember it was Financial Institutions who authorised and encouraged lending to developers in what EBS now identify as  “non-viable locations”. Did they not check local planning applications and demographics? Where was their due dilligence, duty of care and best advice?  Bank’s lending practices are returning to the safe levels of the 1990’s, will property prices follow suit?

 May / June is traditionally recognised as the first main property selling opportunity of the year. We believe that it is now the first buying opportunity.

At the First Time Buyers Seminar at the Radisson Blu Hotel, Galway  on Wednesday 26th May there was a turn out of approximately 200 young prospective buyers. The seminar gave these prospective buyers the opportunity to see what properties were available and listen to experts give their views and advice.  The Seminar sponsored by AIB was introduced by Declan Dooley CEO of the Galway Independent newspaper. Speakers covered the following topics, The Legal Process, The Mortgage Process, First Time Buyers and Tax Implications. AIB confirmed that they were indeed still lending. All speakers were unanimous in their advice to First Time Buyers when they gave the clear message that ‘there was never a better time to buy your first home’.

First time buyers were advised to go out there and negotiate. There are tremendous deals to be had.

However, one of the main points which was supported by a show of hands by the participating audience was the belief that property prices would fall by a further 10% through 2010. What was palpably clear was the uncertainty among the audience. Herein lies the opportunity;

 There are a number of factors which deter buyers from purchasing in new Estates / Developments

1. No one wishes to be the first to buy and in doing so risk paying too high a price.
2. Will they have neighbours? 
3. Will the lighting, roads and auxcillary services be completed and taken in charge by the relevant local authority or management company?

This is where buyTogether offers a solution;

1. We are looking for buyers who would like to live in an estate or development to register their interest with us, their anonymity will be assured.
2. We will advertise this interest through our web-site and request other prospective buyers who are interested in the same estate / development to register with us.
3. When we have enough registered clients we will then, on our clients behalf, approach the estate agent or developer and open negotiations to achieve a better price and  ensure that the estate / development will be completed and taken in charge by the relevent local authority or management company.

There is opportunity and value to be had in the property market, however, it is up to you the buyer to decide if you would like to borrow less and buy better. Through our Group Buying Scheme we will negotiate for you to secure your new home.

Over the last number of years buyers were sold the ”investment”, ‘’starter home” and ”property ladder” concepts. These were great ways to increase sales and profit but as we now know, they were concepts built on weak foundations.

The lasting legacy of these sales techniques has been a total lack of confidence in the property buying process. Young first time buyers who have secured approval in principle of mortgage loan facilities are not prepared to commit themselves to buying their new home in a market which to many has yet to finish correcting itself.

Some old fashioned values are starting to reappear and these in time will help to bring badly needed confidence into the property market. Banks are now assessing borrowers ability to meet their mortgage repayments, whilst at the same time being able to afford to meet other normal living expenses. The sales concepts of ”investment”,” starter homes” and ”property ladder” have all but dissapeared and have been replaced by the ”home, a place for family”.

Buyers are now much more concious of the cost of a mortgage and the problems that too large a mortgage can inflict on their lives and lifestyles for the foreseeable future.

Buyers should borrow less and buy better. Buy a home , a place to raise a family. First time buyers should be excited about buying their home whether new or second hand.

It is in negotiating the purchase of your home that the problems arise. In many instances property buyers rely on estate agents to ”represent” them in their negotiations. As estate agents represent the vendor in property transactions, and seek to secure for them the best possible price, isn’t this akin to having a fox look after the chickens?

Alternatively, check out our savings calculator and see how much professional negotiations can save you on your new home both now and in the future.

The idea of having small estates within easy commuting distance of centres of employment is a good one. Confidence in buying in such estates has evaporated as nobody wants to be the first one in, where they possibly end up paying too high a price for their home.

buyTogether are actively looking for home buyers to register their interest in buying in a development anywhere in the country. Details of these estates/developments will be promoted through the buyTogether website with an open invitation to other propsective buyers to register their interest in that particular development.

When sufficient buyers register their interest buyTogether will then commence negotiation on behalf of clients.

It is simple and at the same time you will have a professional negotiator working on your behalf to secure for you the best deal possible on your new home, in that idylic setting.

What do you think?

The past decade has educated us about the effect of boom and bust, we are left wondering about the cause, the word ‘greed’ weighs heavy on our minds. We as a nation must now deal with the consequences. For some it will take a number of years to recover, for others it may provide opportunity.

 By acting together, new home buyers can negotiate significant reductions so that each participant saves on the price of  their property. Five people buying five properties in the same new development will get a better deal than one person buying one property. Experience shows that when investors purchase multiple properties in a new development they can negotiate significant reductions in property prices.

At buyTogether we believe that we can help you to avail of these opportunities. You can borrow less and buy better, save now and in the long term. Join with others and increase your purchasing power. Be prepared to negotiate boldly to secure your future. This might just be your opportunity.