Buying property - No sensational statements please!

faceman

I dont know about you lot but Im getting very tired of alot of some users sensationalised comments (totally uneducated in some instances) about the property market at the moment so I decided to throw in a new spin on things.

Simply this. If you are buying or planning on buying property within the next 1-2 years then let us know, why you want to buy (somewhere to live, investment etc) and how long you see yourself there. Also if you indicate if where you are buying is just a first step on the ladder or somewhere you expect to be happy for many years. Why are you buying instead of renting or living at home.

Regardless of ill thought polls on the site asking people if they think prices will crash (eh is that within the next 100 years or just next month?), people are buying property. Im just interested in people's rationale behind their decision.

Dirk Gently

greetings faceman.


I plan to build in my parents existing garden next year. The reasons I'm self building is because it's cheaper and I can split the mortgage with my brother and pay off the interest fairly quick leaving me with a manageable mortgage repayment.

To be honest if I hadn't got the option of building in the parents garden I wouldn't consider buying a property in Ireland and I probably would have left the country by now. I can't afford to rent and I can't afford to buy, luckily self build is an option though. Having lived in rented houses and living with 5 or 6 strangers it's not something I want to do again but would be my only option other than self build as to rent on my own or buy is not an option.

Reasons why I wouldn’t buy in Ireland is because the properties are over valued and are kept artificially high because people are obsessed with getting on the property ladder and as long as there are enough fools willing to enslave themselves in debt up until their retirement then the prices are not going to drop. Add to the mortgage repayments, more and more privatized services such as waste disposal, maintenance fees, health insurance obsession instead of improving public health (nice one Harney, it’s a sign of more money in our pockets :rolleyes: ) and a whole rake of other double taxes and charges that effect my disposable income, I feel an investment in property in Ireland at market prices today is as good as agreeing to work the rest of your life to pay off massive debts and ever increasing charges, but then again what choice to people have really. That seems to be the meaning of life in nouveau rich Ireland: - over borrow and spend a life time paying it back.

Hopefully with my situation (which I am lucky to be in compared to others) I will be able to build a new home at a cost to me of half the market value of the finished product seen as I have the scrap of land in the my parents garden to build on. I don’t really see it as a long term home, more as a means to acquire enough capital to bail out of the country a few years down the road and start again somewhere else with a few quid in my pocket. I’m 25 at the moment and a recently qualified architectural technician, so hopefully sometime in my early 30’s I will have gained enough work experience and enough pocket money from the sale of the house to bail out of this greedy little country and set myself up working and living somewhere else where the cost of living isn’t so high.

I’m not sure that what I wrote doesn’t fall into the sensational or alarmist category that you wish to avoid in this thread but they are my plans and how I feel, unless the situation changes in the country in the mean time and goods and essential services become more affordable.

faceman

Sounds like you got a handy one tee'd up, nice one!

zAbbo

whos 'us' ?

Dirk Gently

faceman wrote:

Sounds like you got a handy one tee'd up, nice one!

I wouldn't call it handy considering it involves bailing out of my home country, admittedly through my own choice, but a rather forced and some what regrettable decision, unless I submit to lining other people’s pockets with no benefit to society as a whole for the rest of my life.

My plans could change with changes in social spending or other favorable factors but at the moment bailing out ASAP is my plan A. I'm not motivated by a desire to make loads of money but just a desire to live with out the worry of debt hanging over me.

miju

faceman wrote:

Regardless of ill thought polls on the site asking people if they think prices will crash (eh is that within the next 100 years or just next month?),

well i'm sure that poll isn't very pallatable for you seeing as how you own 3 properties (not including the one you live in at a guess) and probably bought in the last couple of years and is highly exposed to a downturn and are obviously so far in the minority about feeling bullish but sure anyway back on topic

Bluehair

I sold last year and went back to renting. €200k profit in the bank rather than on paper and will happily sit debt free while the market crashes around us.

Calina

faceman wrote:

Simply this. If you are buying or planning on buying property within the next 1-2 years then let us know, why you want to buy (somewhere to live, investment etc) and how long you see yourself there. Also if you indicate if where you are buying is just a first step on the ladder or somewhere you expect to be happy for many years. Why are you buying instead of renting or living at home.

Simply this: you don't appear to be interested in hearing the views of those who are perhaps choosing not to buy within the time frame. So I will explain to you what my position is at the moment.

Currently, I strongly believe that property is chronically over priced. I expect this to change within the next two to three years. In the meantime, I continue to save whatever spare cash I have, and will put it into the purchase of a house at that time.

I intend to buy a house to live in it. This is because I have travelled quite a bit over my life and have accumulated quite a few things which are currently in my parent's attic. My experience with Irish landlords is such that I feel that it's not worth my while redecorating rented houses particularly houses which are let while people go off and do a tour of the world, for example. I do not want to buy a one bedroomed apartment because the ones on sale in Dublin are poorly designed and laid out, probably designed for men who are never there, to be honest. I want to buy a property that I can see myself continuing to live in, even in the event of property market difficulties.

Currently I rent, in a house share. Courtesy of this, the amount of money I save is roughly 20% of my net income per month. I'm intending to change this slightly except I've had a couple of capital outlays lately which are outside normal expenditure. I'd prefer to live on my own, but the cost of one bedroomed apartments (rental) in Dublin is proof to me of the adage "a fool and his money are soon parted".

I don't live with my parents for two reasons: 1) I haven't since I was 17 and frankly at the age of 34 I don't think it would benefit any of us if I tried to move back in full time and 2) they live 200km from my job which is a bit of a commute.

I will not buy property "now" because frankly I think it's overpriced and represents very poor value for money. If you are really interested in the thoughts of all people who are in the market for buying property, you wouldn't limit to only those who feel they have to buy now now now, or true believers if you like. A lot can change in a year or two. So while I am one of those who is expecting a modification to the property market, namely, values downwards, I am also one of those who is in the market to buy a house within the next two years. But I don't believe in buying a house at all costs. I believe there are a certain number of things need to come together for me to do it, and as long as renting - even on my own - is less expensive than mortgaging, and I can save the difference, I see no sense in buying. I'm willing for time to be elastic so I can get what I want, rather than taking what's given to me.

DOLEMAN

It's mad. A friend of mine just sold his house. A 2 million profit in 12 years.

Nice!

chump

I won't be in a position to buy property for 3-5 years.
I do know loads of people who've taken the leap within the last 2, but I'm a few years behind them in terms of college/career etc.
I look forward to owning a place, and am quite confident that the market will be at the very least more settled when I do buy.

Supercell

If I was buying in the next few years it would be in Dalkey, Killiney, Blackrock, Dun Laoghaire, Sandycove or maybe Foxrock or Howth (in that order), most other places in Dublin are at risk of deflation in the next few years imho.
If I bought a nice detached house in any of these areas it would be a place to live in rather than an investment.

Ballyman

Longfield wrote:

If I was buying in the next few years it would be in Dalkey, Killiney, Blackrock, Dun Laoghaire, Sandycove or maybe Foxrock or Howth (in that order), most other places in Dublin are at risk of deflation in the next few years imho.
If I bought a nice detached house in any of these areas it would be a place to live in rather than an investment.

So you obviously have a spare few million lying around then, otherwise you're living in cuckoo land!!

faceman

Calina wrote:

Simply this: you don't appear to be interested in hearing the views of those who are perhaps choosing not to buy within the time frame. /QUOTE]

Simply this. You're correct, Im not - there is plenty of that on other threads if you want to moan.
Buying property is not like buying a car. Its value is not based on how many bricks it took and the quality of the paint job.

You're mad waiting 2-3 years. What do you think is a real price? How much do you think they will come down? Prove that existing prices as of this minute are bubble prices and not actually reflecting real prices.

Anyway that aside, i do hope whatever you chose works out for you.

Calina

faceman wrote:

You're mad waiting 2-3 years. What do you think is a real price? How much do you think they will come down? Prove that existing prices as of this minute are bubble prices and not actually reflecting real prices.

Two things - telling someone they're mad waiting 2-3 years is a sensationalist statement. You don't know in any great detail why I do this, so you can't tell me I'm mad.

Secondly, current average house prices are 11 times average salary. Personally speaking, I would consider that rather on the high side. I dare say you don't take that as any sort of proof, although it forms a certain part of my considerations.

faceman

Calina wrote:

Two things - telling someone they're mad waiting 2-3 years is a sensationalist statement. You don't know in any great detail why I do this, so you can't tell me I'm mad.

Secondly, current average house prices are 11 times average salary. Personally speaking, I would consider that rather on the high side. I dare say you don't take that as any sort of proof, although it forms a certain part of my considerations.

Take your perception of sensationalism, caught with me pants down!

Where are you getting your stats from re 11 times the salary? Either way im presuming its an average across all earners and property prices. But the reality is if you visit the myhome website you will see property for sale in dublin for 250k to the millions. Its not impossible to get on the ladder and after all thats what it is - a ladder. My first home wasnt my first choice but my home now is. LIkewise my parents bought a house in tallaght 30 years ago on a single income. They sat on cardboard boxes and had nothing to their name. Tallaght was considered the sticks back then.

Its like this if you want to get on the property ladder you can. Dual incomes are the norm for mortgage applications nowadays as are longer term mortgages. Mortgage providers are alot more flexible than they were 30 years ago. Tell you what Calina, pick an estate of myhome that you would like to live in. Stick a post up with the average price of a 3 bed in that estate. Then every 6 months for the next 3 years post the asking price. If in 3 years its less than it is today, I will give you 100 euro. Ive posted this for all to read so i have to help to it now!

Anyway, we're off topic.

SparkyLarks

just bought a house.( round march)
I've taken a loger in and am looking for a second
price has gone up by about 30,000 for similar houses in the area.

Waiting for the market to crash has a few problems,
a house worth 300,000 now might be worth over 450,000 in 2 years.
then if the crash came and prices dropped by 60%( drop during the Japan bust) the house is now worth 270,000.

BUT the economic situation would be bleaker, intrest rates would be up, banks probablty not lending as easily, so getting a mortgage for 270 migh be as expensive as getting a 300,000 one now

If a crash comes it won;t just happen and wages and jobs in the country stay high. The knock on economic effect of a builfding slowdown will effect every one. Taxes will go up intrest rates will go up. Will forign investment then go to lower tax economies in eastern europe.

It must be remembered that it was not easy to buy a house in the 80's.

iguana

I completely agree with SparkyLarks. I used to think it was mad to buy a house and that surely there would be a crash, and that it was just worth holding on and prices would come down. However as soon as I actually found myself in position to buy and I started to look at it from every angle this was the one point I couldn't ignore. Coupled with the fact that an average couple in Dublin spends €30k on rent in three years.

I bought my house in north London in May for £252k/€365k. It's a red-brick victorian terrace, with 3 double bedrooms and bathroom upstairs. Downstairs it has a biggish sitting-room, a little sitting-room, a big kitchen-diner + 2nd toilet. To me it is a great family house that I will never need to move from unless we decide to go back to Ireland.

It is in one of those strangely under-priced areas that people are just starting to discover. I had the area ear-marked a year before we were finally ready to buy and was constantly terrified that prices would move out of my league before we got in. It took 10 weeks to complete and in that time asking prices had climbed to £285, for similar properties.

The housing market feels more secure in London than it does in Ireland. Interest rates have been slowly rising here for years, and house prices went down slightly two years ago. The UK is also predicting a housing shortage of 1 million homes in the next 10 years, so period family houses with great transport links to central London can really only go one way. (Barring a plague wiping out a third of the population.)

Our plan is to pay as much off over the next three years as we can so that when we have children I don't need to work. Ideally we would prefer to live in Dublin when we have a family so in a perfect world our house would rise in value enough to allow us to trade it for something similar in Dublin in about 5 years. But with public transport in Dublin being so dire it I wouldn't move more than 2 miles from the city centre. And at the moment our house in the cheapest of those areas of Dublin would be at least twice as much, so it isn't likely.

Yet I can't describe the feeling of utter relief to own this house. Everytime I see it I do a little dance inside. I know that this will be ours until we stop wanting it. Our mortgage payments are more than we paid in rent, but we never rented anything even half this size, but they are managable and we have good PPI, which I don't think you can get when renting.

Bluehair

SparkyLarks wrote:

Waiting for the market to crash has a few problems,
a house worth 300,000 now might be worth over 450,000 in 2 years.
then if the crash came and prices dropped by 60%( drop during the Japan bust) the house is now worth 270,000.

No disrespect but i love how people blindly assume prices will continue to grow wildly before any potential crash.

You've added 50% in the above scenario before dropping it 60%!

What if this year is the bust? What if rates go up again on Aug 3rd? What if prices instead of busting wildly drift downwards 8-10% a year over 5 or 6 years (a much much more likely outcome when you consider the economic consequences of the winding down of construction in this country).

Those who will suffer most is the vast majority of ftbs who bought where they could afford to rather than where they wanted to because they assumed they could trade up in a few years.

whizzbang

SparkyLarks wrote:

If a crash comes it won;t just happen and wages and jobs in the country stay high. The knock on economic effect of a builfding slowdown will effect every one. Taxes will go up intrest rates will go up. Will forign investment then go to lower tax economies in eastern europe.

surely this is a reason to not buy a house? or do you think this won't happen now that you have invested?

SparkyLarks

Bluehair wrote:

No disrespect but i love how people blindly assume prices will continue to grow wildly before any potential crash.

You've added 50% in the above scenario before dropping it 60%!

What if this year is the bust? What if rates go up again on Aug 3rd? What if prices instead of busting wildly drift downwards 8-10% a year over 5 or 6 years (a much much more likely outcome when you consider the economic consequences of the winding down of construction in this country).

Those who will suffer most is the vast majority of ftbs who bought where they could afford to rather than where they wanted to because they assumed they could trade up in a few years.

The crash may be this year, personally I don't think so due to the SSIA's comming in. It may be 2 years it may be 3. but then again it may only drop 20% or 30%.

Property markets tend to drop sharply, once they drop people stop buying in the hopes that prices will drop more.

whizzbang wrote:

surely this is a reason to not buy a house? or do you think this won't happen now that you have invested?

Not if you want to own a house, If you don;t want to own a house then it isnat a good reason.
My point was that if your waiting for a crash before you buy a house youmight find that the econimic impact of a crash while lowering prices will increase the mortgage repayment relative to net income, making it harder to buy houses.

Personally I think if a crash dows come it will hamstring the ecomomy, In that situation I can;t see how it would become easier to buy a house.

whizzbang

SparkyLarks wrote:

My point was that if your waiting for a crash before you buy a house youmight find that the econimic impact of a crash while lowering prices will increase the mortgage repayment relative to net income, making it harder to buy houses.

Personally I think if a crash dows come it will hamstring the ecomomy, In that situation I can;t see how it would become easier to buy a house.

Its a fair point, but that only effects people who need to borrow a high proportion of the cost of the house. People who have money saved will be able to get better deals.

For example if someone has saved 100k over the last few years this might let them buy a property without a mortgage after prices drop. Rather than just using it to pay for some of the property.

In the next few years those with cash will be well set up, those in debt will be in trouble.

SkepticOne

SparkyLarks wrote:

Property markets tend to drop sharply, once they drop people stop buying in the hopes that prices will drop more.

I agree with this, imo. It is kind of the of the current situation of people buying because they think that if they don't they will miss the boat.

bringitdown

Can't afford to buy within the M50, but *could* somewhere like Drogheda, or other commuter belt town. Could not face a commute of more than 1/2 hour to 45 mins ... could not face the loss of social life, and will not consider it unless I need to .. i.e. for a family ... not likely!

Hoping things stabilize or I most likely will put my cash to more spurious uses - travel for instance.

Sponge Bob

Calina wrote:

Prove that existing prices as of this minute are bubble prices and not actually reflecting real prices.

Its pretty obvious that the prices in Ireland today are absolute bubble prices.

income / house price ratios
LTV and Mortgage duration slippages by the banks as the 'mortgageable' punters are no longer there 90% over 25 years now 100% over 35 years since 2001
house prices vis a vis rich developed countries , we are NOT Switzerland so why are houses cheaper there ??
rents vis a vis house prices, rents are now a tiny % of house prices where they should be a lot more historically
investors buying and leaving empty because its not 'worth' renting them when they go up so much anyway.
the emergency interest rates 2001 - 2005 , never have they been so low but thats changing back to 'normal' (german style) now .

Gurgle

faceman wrote:

Im just interested in people's rationale behind their decision.

I bought my house 7 years ago, when there was already talk about rising interest rates, the death of the celtic tiger and house prices coming crashing down.

Bottom line is that anyone borrowing to buy a home only has to consider if they could pay the mortgage if the interest rates go up.

Even if you're buying small now with the intention of trading up, a crash is almost irrelevant. Theres not that much of a difference between selling for €350k and buying for €450k compared to selling for €250k and buying for €330k.

Calina

Actually, I wasn't the one who asked for the proof of bubble prices. Faceman did.

but that's just a comment.

FillSpectre

Sponge Bob wrote:

Its pretty obvious that the prices in Ireland today are absolute bubble prices.

.

Actually that is the point it isn't obvious it is a belief to assume there is a bubble and that people must own a house. It is easier to believe, given current reality, that the older generation will own the majority of housing and rent it to the younger one.

Price is not the only thing that will change or can change. Given pention shortfalls many older people maybe better of selling their family home buying a smaller retiremnet home and a rental property.

I don't know at what point it happened but many people beleive investors are a bunch of fools who randomly buy any property becasue they beleive there will be a capital increase. I think this is where those convenced it musht crash have little foresight or roaunded views.

It is too simplistic to say there will be a crash because prices are too expensive but that is all these people are saying. Once there is a slight tumble investors will panic and you have a crash. Assuming that all investors are the same and that high prices causes crashes doesn't sound like sound logic.

Afuera

Gurgle wrote:

Bottom line is that anyone borrowing to buy a home only has to consider if they could pay the mortgage if the interest rates go up.

Should they not also maybe see if they could weather temporary unemployment, or whether one persons wage could cover the mortgage should the economy get shaken a little too?

Gurgle wrote:

Even if you're buying small now with the intention of trading up, a crash is almost irrelevant. Theres not that much of a difference between selling for €350k and buying for €450k compared to selling for €250k and buying for €330k.

A crash is very relevant if you intend to trade up. If you have a mortgage of 350k on a property that is only valued at 250k after a crash then you're in negative equity. If you wanted to trade up then you'd have to take the loss of 100k on the first house you bought and then take out a mortgage of 330k on the second house.

Gateway

Bluehair wrote:

I sold last year and went back to renting. €200k profit in the bank rather than on paper and will happily sit debt free while the market crashes around us.

Surely if you didn't sell last year and sold now you would be sitting on a bigger profit because the market hasn't crashed?

Gurgle

Afuera wrote:

Should they not also maybe see if they could weather temporary unemployment, or whether one persons wage could cover the mortgage should the economy get shaken a little too?

Thats a given in what I said - that they must be able to pay the mortgage, even if it goes up.

Afuera wrote:

A crash is very relevant if you intend to trade up. If you have a mortgage of 350k on a property that is only valued at 250k after a crash then you're in negative equity. If you wanted to trade up then you'd have to take the loss of 100k on the first house you bought and then take out a mortgage of 330k on the second house.

I understand the idea of negative equity thank you, its not rocket science.

You don't have a mortgage of €350k on a property worth €350k. If you do, then you've only just bought the property with 100% finance, you haven't made a single payment on your mortgage yet and you certainly aren't in a position to trade up.

Your example is meaningless.

Gurgle

whizzbang wrote:

For example if someone has saved 100k over the last few years

lol @ the sheer idea of someone saving €100k
What planet are you on?