alarmed at the cost of houses now.

homeOwner

I have been looking for a 3 bed semi for the past year and was outbid on two properties. I have started looking again, and everything has gone up by at least 50K, I even viewed a house that was on sale late last year, the sale fell through and it is back on the market for 45K more now.

Its getting really scarey. Not only can I not afford now a house that I want, I can barely even afford a house that I wouldnt have bothered looking at last year. I am coming to the end of my list of things I want in a house and location, crossing each one off as it becomes unobtainable. My list has dwindled down to nothing. It has now become buy whatever you can get your hands on.

I have to say I am really worried that if I buy at the upper limits of my budget and interest rates go up I'll be screwed.

How are other people coping with it?

Idleater

homeOwner wrote:

How are other people coping with it?

• Lower your expectations.
  
• Realise that not everyone can get a 5 bed detatched, fitted kitchen, Plasma TV, home automated, slate tiled, walnut floored, big garden, 06 car parked in a cobblelock driveway, in a beautiful neighbourhood house.
  
• You do not have to keep up with the Jones'.
  
• Ask your parents what they had in their house when they started. Build it up over time. Borrow a table, couch and chairs.
  
• Are you prepared to put some (or a lot) of your own time and effort into making it nice? In that case, buy a "1960's" decorated house that noone else wants "because it is so much work and we just want to move in immedietly" and paint it yourself.

Where are you looking and what are you looking for?

kluivert

nereid wrote:

• Lower your expectations.
  
• Realise that not everyone can get a 5 bed detatched, fitted kitchen, Plasma TV, home automated, slate tiled, walnut floored, big garden, 06 car parked in a cobblelock driveway, in a beautiful neighbourhood house.
  
• You do not have to keep up with the Jones'.
  
• Ask your parents what they had in their house when they started. Build it up over time. Borrow a table, couch and chairs.
  
• Are you prepared to put some (or a lot) of your own time and effort into making it nice? In that case, buy a "1960's" decorated house that noone else wants "because it is so much work and we just want to move in immedietly" and paint it yourself.

Where are you looking and what are you looking for?

No offense RTFQ!

3 Bed Semi.

Although correct in saying that you need to provide more info into this.

In Monaghan Cavan Louth you can get a 4 bedroom detached country house on a half arce site for 400k. You cant get that in Dublin.

The_Conductor

How are other people coping?

To be totally honest, I think that there is a mass case of ostrich syndrome going on- people have their heads in the sand and do not want to see the bigger picture. You are quite right- interest rates are going up. How many of these people have manipulated salary certificates to get a higher mortgage? Can they really afford it? What will happen when rental returns for investors are no longer sufficient for interest cover?

People have been predicting a massive correction in Irish property prices for almost 6 years now. The one thing that was not in the equation 6 years ago- that is ever present now is, rising interest rates.

Banks and other financial institutions are encouraging this hysteria- AIB's latest being "Yes, you can have a life and mortgage- only make interest repayments for the first year" (at branch level they are offering interest only repayments to first-time buyers for up to 3 years).

I know things look bad and look as though they are getting worse. I am attaching to this post a market situation report issued yesterday by Austin Hughes, Chief Economist of IIB- it makes interesting reading. They predict ECB rates of 3.25% by Christmas and with a hike in German VAT rates at the end of the year a series of further rises in 2007 to keep inflation down. They are predicting the next rise to be as early as May, not June/July as previously forecast.

While no-one can predict the future- at least being properly informed is a good start.

While you are worried that you cannot even buy into the bottom of the market at present, there is every indication, that contrary to the rosy outlooks being painted elsewhere, property prices *may* take a serious hit as mortgage repayments really begin to bite (and also in my opinion it is likely that quite a lot of buy-to-let property 'investors' may cash in their chips and try to secure as much of their capital appreciation as possible).

Keep your own fundamentals in mind- you are not out to buy a property "at any cost"- very shortly average rents will no longer cover average mortgage interest payments (in the Dublin area at least), so the old saying about renting property being a waste of money as you are simply paying off someone else's mortgage will no longer apply. Its quite possible that it may reach the situation where landlords will be letting properties seriously below their outgoings- you might be the beneficiary. All of this is hypothesis of course- no one knows what may happen.

At the end of the day- if you are not going to be happy to live in a particular house, you have no business buying it. What was the reason you turned your nose up at it when it was on the market last year? Is the same reason still valid? If the actual price of the property was not the issue and all other things were equal- would you still consider buying the property? If not- well then you probably should not buy it.

Bluetonic

nereid wrote:

Are you prepared to put some (or a lot) of your own time and effort into making it nice? In that case, buy a "1960's" decorated house that noone else wants "because it is so much work and we just want to move in immedietly" and paint it yourself.

If only it was that simple to do.

You are obviously very young/naive, or both.

DublinWriter

nereid wrote:

• Are you prepared to put some (or a lot) of your own time and effort into making it nice? In that case, buy a "1960's" decorated house that noone else wants "because it is so much work and we just want to move in immedietly" and paint it yourself.

Dude, you're in la-la land saying that. I've seen 1940's 2-bed semis in Kimmage with virtually nothing done to them go as high as 450,000 - 500,000. The same for 1920's terraced cottages in the East Wall area.

homeOwner

nereid wrote:

• Lower your expectations.
  
• Realise that not everyone can get a 5 bed detatched, fitted kitchen, Plasma TV, home automated, slate tiled, walnut floored, big garden, 06 car parked in a cobblelock driveway, in a beautiful neighbourhood house.
  
• You do not have to keep up with the Jones'.
  
• Ask your parents what they had in their house when they started. Build it up over time. Borrow a table, couch and chairs.
  
• Are you prepared to put some (or a lot) of your own time and effort into making it nice? In that case, buy a "1960's" decorated house that noone else wants "because it is so much work and we just want to move in immedietly" and paint it yourself.

Where are you looking and what are you looking for?

While I agree with the main point of your post to lower expectations, I think you missed the point of mine.

I am not looking for a 5 bed detached dream home nor am I against buying a fixer upper and doing the work myself. My point is I cant afford even a "dump" that needs 100K spent on it to make it livable. If my only problem was having to sit on the floor for a while until I earned the money to furnish the house, I would be sorted. My problem is I cannot afford even a 3 bed semi without getting myself into some serious debt and with interest rates rising I am afraid of doing that.

whizzbang

smccarrick wrote:

How are other people coping?
report issued yesterday by Austin Hughes, Chief Economist of IIB- it makes interesting reading. They predict ECB rates of 3.25% by Christmas and with a hike in German VAT rates at the end of the year a series of further rises in 2007 to keep inflation down. They are predicting the next rise to be as early as May, not June/July as previously forecast.

Excellent post! Its interesting that even the banks are starting to sound negative! I'm amazed that more people are not concerned about how our lock in to the Euro coudl lead to us having punishing interest rates when we need the oposite! Just because it is working for us now doesn't mean it always will!

MorningStar

This is the same problem many people are facing and the same one I faced when I returned to Ireland. Thinking I could buy a home in my desired area and then realising I couldn't. You should simply buy the best you can if you want to buy or decide you will rent instea.

The biggest problem for most buyers that they simply don't understand is guide prices are 10-20% BELOW the price the property will go for in most cases. People look and bid in the wrong section of the market and get very frustrated.
THe other element is people think they can buy and live like their parents. Expect to have to upsize or upgrade at some point. THis is modern western culture that we caught up to .

nereid is right to an extent. Basically the expectations of many people is too high. If HomeOwner could give us a little idea of what he is looking for we might know what his problems are.

Afuera

homeOwner wrote:

How are other people coping with it?

Waiting for it to crash.

oxygen_old

OP, did you think about buying a hose in a satalite town? In Carlow for ezapmle you can buy a new SemiD for 2k to 2.5k. And the commute is not that hard. Have a look at the train time tables.

Idleater

Bluetonic wrote:

If only it was that simple to do.
You are obviously very young/naive, or both.

Hate to disappoint you, but this is exactly what I did. It takes a lot of work, work that other bidders were not prepared to do.

DublinWriter wrote:

Dude, you're in la-la land saying that. I've seen 1940's 2-bed semis in Kimmage with virtually nothing done to them go as high as 450,000 - 500,000. The same for 1920's terraced cottages in the East Wall area.

I would consider Kimage and East Wall as pretty close to City Centre or at least pretty "desireable". You are paying for the location. If the OP wants to live by location then they must pay the price.
A very brief search on MyHome.ie results in two apartments at <€190k:
Coultry Neighbourhood Centre, Santry Way, Ballymun, Dublin 9
Carraig Court, Poppintree Neighbourhood Centre, Dublin 11
These are certainly within First Time Buyers grasp are they not?

kluivert wrote:

No offense RTFQ!

Cheers, I know what the OP posted, I was just using the example of the "ultimate" in houses that it seems that everybody wants. You know, the ones in the magazines and on Grand Designs...

homeOwner wrote:

My point is I cant afford even a "dump" that needs 100K spent on it to make it livable.

So don't spend €100000. I have lived 2 years now in a house with a lean to extension that never adhered to any building regs, a stuck together B&Q kitchen, a bathroom stuck out back of the kitchen, one bedroom, and as the better half put it, "a building site in the sitting room" for a year while I put in the effort to rebuild/renovate/decorate it myself. Now, it is not a site any more, and comfortable to live in (during the summer months).


The sentiments expressed by smccarrick are very valid - don't get seriously into debt.

DublinWriter

Afuera wrote:

Waiting for it to crash.

Won't happen.

OP - check out places like Dunshaughlin or Ashbourne. Still 'bargains' to be had there.

whizzbang

Anyone get the feeling we are like the boiling frog in the story?

http://en.wikipedia.org/wiki/Boiling_frog

for example:
450k for a 1 bed appartment in Bray!!! Bargain!!!!

DublinWriter

whizzbang wrote:

450k for a 1 bed appartment in Bray!!! Bargain!!!!

Considering it's coastline location and access to the DART, it might just be a bargain! On the totally opposite end of the DART line there's a new apartment complex in Howth, minimum for a 1-bed is 550K.

I should have been an estate agent.

BTW, Charles Handy, the boiling-frog guy, grew up in Ireland and moved to the states when he was 12.

whizzbang

DublinWriter wrote:

Considering it's coastline location and access to the DART, it might just be a bargain! On the totally opposite end of the DART line there's a new apartment complex in Howth, minimum for a 1-bed is 550K.

I should have been an estate agent.

BTW, Charles Handy, the boiling-frog guy, grew up in Ireland and moved to the states when he was 12.

hehe! even a totally made up example has people rationalising! People's idea of "Worth" and "Value" have been totally messed about by this market!

I didn't know that about Charles Handy! Perhaps he got his ideas through looking at the ****e Irish weather!

qwertyphobia

why do you need a three bedroomed house?

Afuera

DublinWriter wrote:

Won't happen.

That's the kind of mentality that has led the market to where it currently stands. Give me one good reason why it won't crash.

And don't give me that hilarious story about the immigrants coming here for a few years to learn English (and earn a few bob while they're at it) that are going to be the saviours of the Irish property market.

Are we to ignore all the warnings from the ECB, OECD et al?

My advice to the OP is to rent for the next 5 years or so, saving as much money as you can put aside and then reasses the market then.

homeOwner

qwertyphobia wrote:

why do you need a three bedroomed house?

I need a three bed house because I am getting married this year and plan to start a family. We would like to have two kids so hence the three bedrooms. Granted we will only have one of those kids in the next 12 months, but if I buy a two bed house now....in another 2 or 3 years when I need the extra room, property will have gone up another 80K or so out of my reach.

Ploughing all my extra income in to a mortgage does not seem prudent in case of interest rate hike or an illness in the family.

Afuera wrote:

My advice to the OP is to rent for the next 5 years or so, saving as much money as you can put aside and then reasses the market then.

House prices are going up faster than I can save.


For those of you recommending living in the outlying counties, I have thought about that, but I work in the city centre and I dont have flexible work hours. I would spend at least 3 hours commuting a day, at least! I know some of you do that but it seems insane to me. I dont think it is a viable trade off.

Dont get me wrong, I am not moaning about my lot in life.....I am just pointing out that house prices are still rising at an alarming rate and I am wondering how other people cope with it, when they have kids and a huge mortgage.

whizzbang

homeOwner wrote:

I need a three bed house because I am getting married this year and plan to start a family. We would like to have two kids so hence the three bedrooms. Granted we will only have one of those kids in the next 12 months, but if I buy a two bed house now....in another 2 or 3 years when I need the extra room, property will have gone up another 80K or so out of my reach.

Ploughing all my extra income in to a mortgage does not seem prudent in case of interest rate hike or an illness in the family.


House prices are going up faster than I can save.


For those of you recommending living in the outlying counties, I have thought about that, but I work in the city centre and I dont have flexible work hours. I would spend at least 3 hours commuting a day, at least! I know some of you do that but it seems insane to me. I dont think it is a viable trade off.

Dont get me wrong, I am not moaning about my lot in life.....I am just pointing out that house prices are still rising at an alarming rate and I am wondering how other people cope with it, when they have kids and a huge mortgage.

I think people are coping with it through the huge rise in personal debt, 25% last year I think! People are living beyond their means and so have to build up debt to compensate. This can only go on so long.

lomb

several options--
1
lower your expectations -accept apartment living is the future for many many people even with modest familys like 2.2 kids
2 wait to inherit money, "what goes around comes around"
3 try and increase your income
4 wait for a probably non existant crash
5 commute or live in an undesirable area like ballymun, parts of clondalkin, tallaght etc
6 a combination of the above

homeOwner

lomb wrote:

several options--
1
lower your expectations -accept apartment living is the future for many many people even with modest familys like 2.2 kids
2 wait to inherit money, "what goes around comes around"
3 try and increase your income
4 wait for a probably non existant crash
5 commute or live in an undesirable area like ballymun, parts of clondalkin, tallaght etc
6 a combination of the above

I understand that I do have to lower my expectations, but do you think that wanting a small house with a garden, and I am not talking about anything fancy, is an unreasonable expectation for someone who earns above average income?

How low does someone's expectations have to go? I personally dont think that raising kids in an apartment block is healthy. There is no room in my apartment block for kids to play in the car park. Literally there is just room for cars. After that its the main road, which is a non starter for kids to play. So they end up staying cooped up in a 2 bed apartment?

In other countries where families live in apartments, say example Spain, they are usually a lot bigger than apartments in Dublin and there are lots of local facilities like outdoor swimming pools and playgrounds where kids can play supervised. We lack those basic facilities here.

Calina

I'm waiting it out, to be honest with you. I realise I'm in a different situation to you, being single at the moment, and not being a position to consider starting a family. I got very frustrated last year, but now, having done some further maths involving the cost of buying versus the cost of renting, I've come down on the side of the latter.

I don't get why people are so judgmental in this country, or assume they know best for people when they don't know their circumstances. For example, I want a three bedroomed house too, although I'm single and won't be having children. The primary reason for this is because storage is at a premium in most smaller units. I looked at brand new and horrifically expensive show apartments in Swords not so long ago and I could possibly live in it provided I didn't own anything more than around 10 books and four CDs, plus almost no clothes or kitchen equipment. I find many new builds are not built with the needs of the user in mind. I suspect, also, that this is why one off housing just won't go away.

I also think that anyone who says "look farther out" is also a bit unwise. I don't know the OP's position in life, but currently I can afford to buy something roughly 30 miles from where I work. If I were to buy it, I would look at an exponential increase in the cost of getting to work, particularly the way oil prices are going, plus, the way traffic in this city area works, I'm looking at spending three hours plus in the car every day. I can rent for significantly less all of five minutes from my job. Increasing the number of people compelled to do that, and there will be plenty of people with a lack of sympthy on Commuting/Transport for people who do move further out.

I'd be happy to put work into renovating a property, however, equally, I find that the price for such properties is still very excessive in the Dublin area. I can't speak for outwith Dublin.

I don't see the point in spending a significant amount of money on property that doesn't suit my needs. So saying "You can afford 190K for a one/two bedroomed apartment" is really not an answer. I wouldn't spend 100E on a dress just because I can afford it, right - I'd want to make sure it fitted me. Why shouldn't I apply the same standards to 200000E worth of property? Telling someone to buy something which doesn't fit their lives "just to get on the ladder" is crazy advice.

Interest rates are on the up. The rental market is pretty much static and has been while purchase prices have skyrocketed. We're not short of houses or apartments. We're short of people selling them. As holding that property becomes more expensive, then the balance may change. Then again, it may not. All I know is that I'd prefer not to be paying a bill that according to figures in today's Indo - not usually the most prudent when it comes to property advice - may rise by 200E a month.

ambro25

I just don't understand this psyche of 'having to' own a home when you're getting married/in a family way. I find it very anachronistic. But that's just me :rolleyes:

homeOwner wrote:

in another 2 or 3 years when I need the extra room, property will have gone up another 80K or so out of my reach.

Assumption. As far as I would be concerned, a bit too much of one to add another €80/100k around my neck for 30+ years today.

homeOwner wrote:

Ploughing all my extra income in to a mortgage does not seem prudent in case of interest rate hike or an illness in the family.

Good. Shows you're sensible with €s. Too few people like that about

homeOwner wrote:

House prices are going up faster than I can save.

That I can easily believe, and I assume based on fact. However, consider two distinct things here:
(i) the rate at which you save, which you know, is factual and which can be fairly accurately predicted over a given period,
(ii) the rate at which house prices rise, which is also factual but increasingly subjected to factors hitherto-ignored or, well, 'factored out' (such as rising interest rates)

Bear in mind that a rise in interest rates is a 2-sided affair: it imparts a downward pressure on house prices (yeah, I know - which has yet to materialise in the markteplace - but still...) and it increases your saving rate (because your savings are making more babies ). So both of the above may yet equilibrate in your case, depending on how high the interest rates are going to get.

homeOwner wrote:

For those of you recommending living in the outlying counties, I have thought about that, but I work in the city centre and I dont have flexible work hours. I would spend at least 3 hours commuting a day, at least! I know some of you do that but it seems insane to me. I dont think it is a viable trade off.

Provided you would not be dropping the kids off at school in the future on your commute, get a bike. Honestly. You would not believe the difference in commuting times. I tried to commute 6 miles (D16-D6) by bus - that didn't work out. Then I tried by car, usually either an hour each way, or up and away at 07:30 AM... for 6 central miles FFS! - that didn't work out either. Now I've got a moped - 15 minutes each way, whatever the weather, time and traffic. The change to my quality of life has been... well, it's beyond words.

homeOwner wrote:

Dont get me wrong, I am not moaning about my lot in life.....I am just pointing out that house prices are still rising at an alarming rate and I am wondering how other people cope with it, when they have kids and a huge mortgage.

Unless they're taking in fairly serious money monthly, I'd hazard "with difficulty, an overdraft facility and maybe some credit card debt juggling".

Look, buying a house is a hard decision, the hardest you'll ever make and certainly the most important you'll ever make for your family (present and yet to come). So don't be taking it out of desperation - you owe it to yourself, as an apparently sensible and €-conscious chap, and to your family. Carefully weigh both the financial and personal pros and cons of a buy-whatever-now versus wait a year or two (impending kids or not).

whizzbang

homeOwner wrote:

I understand that I do have to lower my expectations, but do you think that wanting a small house with a garden, and I am not talking about anything fancy, is an unreasonable expectation for someone who earns above average income?

How low does someone's expectations have to go? I personally dont think that raising kids in an apartment block is healthy. There is no room in my apartment block for kids to play in the car park. Literally there is just room for cars. After that its the main road, which is a non starter for kids to play. So they end up staying cooped up in a 2 bed apartment?

In other countries where families live in apartments, say example Spain, they are usually a lot bigger than apartments in Dublin and there are lots of local facilities like outdoor swimming pools and playgrounds where kids can play supervised. We lack those basic facilities here.

Its frustrating that hard workers who are on good wages can't buy a good house for their family and they are just told "buy someone you don't want to live". I don't think this is sustainable, where is all this money comeing from?! There must be a limit to it! you can't have prices go up for even with eventually nobody being able to buy them!

Even now very few individuals are able to buy on their own! its always assumed they will go in with someone else. That doesn't mean property is affordable, it just means its unaffordable and people have to do unreasonable things to get them!

MorningStar

homeOwner wrote:

How low does someone's expectations have to go?

To the level they can afford and not to a level they can't.
My extended family live in Italy in a 2 bed appartment smaller than an Irish one and had 2 kids. The kids still live there in their 20s in a room that is smaller than a box room and they are opposite sex.
Most appartments outside the city centre have gardens and many appartment in the city have gardens e.g. Bachelors Walk.

sapper

Houses are indeed going for 10-20% over asking price - I think there's a few reasons for this -

- There are feck all houses for sale on the market these days. If you are looking for a specific house in a specific area you will probably only have seen one or two suitable ones since November. This pushes up the competition between bidders.

- Estate agents in each area have been pricing based on their last sales of the similar house in that area - the problem is that for the most part they may not have sold a similar house in the area since before Christmas, and in the meantime there has been a build-up of house hunters.

- Anyone bidding on a house doesn't want to wait for a similar house to come up on the market because by the time it shows up, house prices will have gone up even more. I was bidding on a house priced at 450K last Oct, it sold for 470K before Christmas, now I see a smaller house on the same street priced at 500K! And someone, somewhere will pay it!

- Very few people these days will pass on a property that is the right size and is in the right location because it needs a bit of work. Anyone under 40 buying a second house is almost guaranteed to have experience in DIY. A crap kitchen and lime green bathroom suite is going to have very little effect in keeping the price low.

- In this age of cheap money and cheap mortgages, everyone is holding on to properties so that they can rent them out. This is keeping supply lower and prices higher.

- It really seems to me that people are paying what they can afford not and what the house is worth. Now I know the house is worth whatever someone is willing to pay for it, but there seems to be no price too high these days. Take the houses above - one up for 450K in Oct and now a smaller one up for 500K - I'm sure someone, who wants a similar house in a better area but can't get one, will pay it eventually. I really wish there was a publicly available register which listed the actual selling price for every house sold in each area over the previous year or two - maybe that would make people think twice before lobbing in huge bids. And it would keep estate agent prices more realistic

- Anyone under 35 buying a house has known nothing but good times over the past 8 years or so - cheap mortgages and rising salaries. Anyone getting a mortgage these days will normally stretch it to about 100/200 over what they can easily afford - why not? we all laugh at stories of people who were worried they were stretching to buy a house for 100K 8 years ago - we think 100/200 euros will be nothing to us in 2 years time. It's going to take a while to change that mentality - I think it won't start to bite until the ECB rate gets up to 3%

As for me - I've just gone sale agreed on a place after 6 months looking! Agreed it at 50K over asking price. My advice is to jump in and grab anything you can and look at houses worth 50K less than you can afford. I work in the city centre too and will be moving out from my current pad 10mins from work to a house 10 miles away in Lucan. I'm going to cycle in and out - I timed it last week - 35mins from the IFSC.

MorningStar

sapper wrote:

Houses are indeed going for 10-20% over asking price - I think there's a few reasons for this -

Nice theories except the estate agents will tell you their guide prices are 10-20% below the price they expect depending on which agent and the market section the house belongs too. There have been numerious articles quoting estate agents. You can ring them up and ask them what their asking prices are based on and some will tell you. The old hack line is "last house sold in the area" but it hasn't been true for the majority of agents for years.

sapper

My sister works in an estate agents and she gave me a peep of their database which lists all the houses sold by all the estate agents participating in the scheme (most of the big guys) in each area. It was all broken down by the pertinent categories - house size, bedrooms, sq ft, standard etc.

I assume that this is the kind of thing they base their prices on. The problem was, the list only showed the advertised price, not the actual sale agreed price. That would mean only the guys who are actively selling lots of houses will have a handle on the probable sale-agreed value

I tell above how a house was up for 430K last Oct and went for 480K eventually. I now know that it should have sold for 500K - but the agent was Gunne in Phibsboro and they normally only have 4 or 5 houses in their window. They were just completely unaware that 430K was totally too low

MorningStar

Sapper

Go into an estate agent and ask them for a valuation. There are two types one which they charge for and give you an accurate price. The other is asking them how much you will get for it and how they sell it. They may work it out the same way but one price will be an asking price to "stimulate" interest. THe estea agents don't get shocked that they manage to sell everything more than they put up for.

As I said when being interviewed the agents have admitted this on TV, Radio and in the papers. It is not a secret or something hush hush. Don't believe me if you like.

Yv

My family moved 5 years ago to Galway; my parents are still looking for a house. We live in a rented house at the moment. They're both in their 50s and because of the way prices have gone simply can't afford either the houses they want or the houses they could just about make do with. It's very depressing for the two of them, & there's nothing one can do about it except either give in & buy an unsuitable property or wait another x years hoping for things to improve.