Buying property - No sensational statements please!

Afuera

Gurgle wrote:

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.

So would if be more meaningful to you if you've paid 50k of the mortgage off after originally taking a 100% loan? You've still got an asset worth 250k and an outstanding mortgage of 300k.

ionapaul

Gurgle wrote:

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

I have about that amount in liquid investments - the stocks markets have been very kind to many of us over the past few years! I am not going to buy in Ireland without a market correction - that said, I applied for a permanent resident visa to Canada almost two years ago and this should be processed over the coming year.

Cantab.

ionapaul wrote:

I have about that amount in liquid investments - the stocks markets have been very kind to many of us over the past few years! I am not going to buy in Ireland without a market correction - that said, I applied for a permanent resident visa to Canada almost two years ago and this should be processed over the coming year.

I'm joining the emigration club too! (Germany) I feel another brain drain (similar to that of the 1980s), again out of economic necessity, but instead of being victims of an impoverished economy, we are now victims of economic inequality.

It's not just the youth who'll leave, it's also the immigrants. I'm going with my savings to Germany to spin the fortune wheel. There's too much at stake here in Ireland (most notably house prices, poor transport and competitiveness).

whizzbang

Gurgle wrote:

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

I live on planet Scrimpnsave.

FillSpectre

Cantab. wrote:

I'm joining the emigration club too! (Germany) I feel another brain drain (similar to that of the 1980s), again out of economic necessity, but instead of being victims of an impoverished economy, we are now victims of economic inequality.

It wasn't really a brain drain it was youth drain. It is also not economic inequality but simply greed. Good luck with Germany when it comes to economic equality and enjoy the tax for having parents and the 100 year mortgages.

Cantab. wrote:

It's not just the youth who'll leave, it's also the immigrants. I'm going with my savings to Germany to spin the fortune wheel. There's too much at stake here in Ireland (most notably house prices, poor transport and competitiveness).

No it is the youth who leave because they "deserve" better imigrants stay where there is work. Germany has a few problems but you probably studied all of that. Compare the Nanny Irish state with the German Dominatrix state and see how you get on. DOn't say you are catholic or you have to pay a tax:p

bringitdown

whizzbang wrote:

I live on planet Scrimpnsave.

What are property prices like there ...?

TheLedge

I emigrated 2 years ago. Based in England now where everything (in the way of economy/transport/housing/infrastructure) is better. Well, what would you expect from the former rulers of the world?

1. I earn twice what I would be earning had I stayed in Ireland. (Galway)

2. If I wanted to buy, I would have far more to chose from and if I had to move further from my job for a cheaper property, I could manage the commute far better. If I was to do the same in Galway, I'd be looking an unfeasable commute with the state of the roads/traffic.

3. I have saved a lot of money in the past 2 years. I would have over 50k as a deposit for a house in Ireland, but Ireland isn't seeing a penny of it until things improve. If they don't improve, well, I'll spend my money elsewhere. We live in a global village don't we? Well if I dont like the look of the price of Product A, I can buy Product A+1 cheaper elsewhere.

I'd love to live in Ireland again, but realistically, its going to be 5 years down the road.

A friend of mine that I went to school with has recently purcahsed a 3 bed semi in Galway for over 300k. FTB.

It'll be interesting to see what happens over the next five years as we're at the two different ends of the opinions spectrum wrt the housing market. I'm a doomlord, he's a panic merchant.

Cantab.

FillSpectre wrote:

It wasn't really a brain drain it was youth drain. It is also not economic inequality but simply greed.

Whatever you want to call it. At least in Germany, centrally located apartments close to your workplace can be bought for 3.5 times salary over 15-20 years - an overly optimistic expectation for a professional worker?

FillSpectre wrote:

Good luck with Germany when it comes to economic equality and enjoy the tax for having parents and the 100 year mortgages.

Not sure where you're getting the 100 year mortgage stuff from.

FillSpectre wrote:

No it is the youth who leave because they "deserve" better imigrants stay where there is work.

"Deserve" is a word of your own use. As TheLedge put it: "if I dont like the look of the price of Product A, I can buy Product A+1 cheaper elsewhere". It's called the global economy. In this regard, an Irish bank certainly does not "deserve" to have me as their customer. A property developer does not "deserve" my savings to help pay for a 2-bed flat in a crappy location with no infrastructure. Equally, the Irish economy does not "deserve" to have me as a tax-paying citizen when I can have a better quality of life elsewhere in the EU.

FillSpectre wrote:

Germany has a few problems but you probably studied all of that. Compare the Nanny Irish state with the German Dominatrix state and see how you get on. DOn't say you are catholic or you have to pay a tax:p

Catholics pay a tax no matter what parish they live in! And besides, Germany has a great Catholic heritage and quite a strong faith! Not sure what you mean about the "German Dominatrix State".

FillSpectre

Cantab. wrote:

Not sure where you're getting the 100 year mortgage stuff from.

Well maybe you should learn about the place you are going then as 100 year mortgages are common and sold on with the property. THis is becasue property isn't cheap compared to salaries. You of course know better than me as you think they are all 3.5 time your salary:rolleyes:

Cantab. wrote:

"Deserve" is a word of your own use. As TheLedge put it: "if I dont like the look of the price of Product A, I can buy Product A+1 cheaper elsewhere". It's called the global economy. In this regard, an Irish bank certainly does not "deserve" to have me as their customer. A property developer does not "deserve" my savings to help pay for a 2-bed flat in a crappy location with no infrastructure. Equally, the Irish economy does not "deserve" to have me as a tax-paying citizen when I can have a better quality of life elsewhere in the EU.

Where you live isn't a global market or really decided by the gloabl economy directly. Not sure why you blame the bank now, can you explain or is it just a rant? Developers to blame for your unrelistic demands then? The irish economy is not who has supported you but its' people that you most certainly do owe but I doubt you can see that. I was correct is saying it was greed as is obvious from your reply as you do think you deserve it all and that somehow when times are hard you runn away.

Cantab. wrote:

Catholics pay a tax no matter what parish they live in! And besides, Germany has a great Catholic heritage and quite a strong faith! Not sure what you mean about the "German Dominatrix State".

Well I did sy don't say you are Catholic to avoid the tax. You don't pay a catholic tax here. JUst to clarify and get something clear, Youare are aware people refer to the "Nanny State" to mind you and tell you what to do?
Well a "Dominatix State" would be similar for telling you what to do but not so patient or kind. Get the idea? Ireland "Nanny State" Germany "Dominatrix State". People don't like the nanny state go to Germany to experience the rules. My personal favorite is the parent tax.

I have never been to Germany but at the same time you don't seem to be aware of somethings I am, the difference is I don't plan on living there while saying everything is crap about the place I am from. I am kind of curious what is the longest you have not lived here or stated elsewhere?

whizzbang

bringitdown wrote:

What are property prices like there ...?

We all rent

squire1

When I bought my first house in 1999/2000, all the "experts" said we at the top of the property rise. Indeed, house prices even fell slightly during the time I was waiting for the house to be ready if I remember correctly. Five year later I sold the house for a €125K profit (€140K initial investment).

Now I'm not saying that house prices will not crash but just that I'm glad I didn't take the experts advice back 6 years ago and wait for the bubbe to burst.

Many people who are buying for the first time now probably feel that they have missed the boat as far as double digit price rises are concerned. The above just points out that the feelings were the same 6 years ago.

miju

125k clear profit squire1 or did you trade up and "top-up" your existing mortgage?

squire1

miju wrote:

125k clear profit squire1 or did you trade up and "top-up" your existing mortgage?

I bought it for €140 on a 20 year mortgage and sold it for €265 after five years. I then rented for four months while I built my own house in an area I actually wanted to live in.

The first location was chosen purely on market potential (the professional opinion of a good friend, whom I later bought a few pints:D ) and was not where I wanted to raise my kids.

scargill

squire1 wrote:

When I bought my first house in 1999/2000, all the "experts" said we at the top of the property rise.

Same happened to me. I bought a house in 1998 for €96k. I got the mortgage through a friend that worked in Irish Permanent. He told me at the time that he thought I was mad to be borrowing so much (€88k) and that the property was overvalued (prices in the same estate had risen by around 25% in the previous 2 years).

At the time I didn't care whether it was overvalued or not - the difference between renting a similar property and the mortgage wasn't great.

He reckoned that he was better off saving (while renting) and buying in 2 years when the bubble burst !!
He gave up on that theory this year and bought a house.

My point to him was that when property prices drop it is normally because of high interest rates and rising unemployment. In that case property will be cheap(er) and no-one will be able to afford it!

The argument of waiting until the bubble bursts doesn't really make sense to me. When the bubble bursts it won't be just property prices that will be affected surely ? So much of our economy hinges on property that it would have huge knock on effects.

If you can afford the mortgage repayments with crucifying yourself then it doesn't matter if the house drops by 50% in the morning. If you are living in the house it doesn't matter a damn. It's a different story if you own 3 houses and have 100% interest only mortgages.

Supercell

squire1 wrote:

When I bought my first house in 1999/2000, all the "experts" said we at the top of the property rise. Indeed, house prices even fell slightly during the time I was waiting for the house to be ready if I remember correctly. Five year later I sold the house for a €125K profit (€140K initial investment).

Now I'm not saying that house prices will not crash but just that I'm glad I didn't take the experts advice back 6 years ago and wait for the bubbe to burst.

Many people who are buying for the first time now probably feel that they have missed the boat as far as double digit price rises are concerned. The above just points out that the feelings were the same 6 years ago.

Predicting 9/11 and the cheap credit that resulted afterwards was well nigh impossible to predict. It just means they were starting to fall then and should now be around the same or maybe slightly (they were starting to fall) higher but only by a couple of percentage points.

Thats where prices should be , the celtic tiger is gone, the "booming" Irish economy is based on cheap credit and greed, there is a long way to fall.

Whats worse is so many people just don't believe it, they just don't seem to grasp that this shot in the arm was the result of cheap credit arising from the US Govt trying to reassure the global markets that all was fine in America post 9/11

Many have been lucky like squire1 and gotten out at the right time too imho.
Its the 2005 and 2006 home buyers that are lambs to the slaughter that I feel slightly sorry for..(not really, in any rational market historically I'd be able to afford a decent house at 3-4 times my salary over 20 years instead of a shiitehole semi in the arse end of Cavan which I refuse to live in at any price), I for one will be happy to see the coming market crash.

I should add, I can afford to rent a nice place in Rathgar (are there any bad areas in Rathgar!!??..) and save at the same time..can anyone tell me if there is a real shortage of property in Dublin then try to explain this!! ??

ionapaul

You're right - both with regard the effects a property crash will have on the Irish economy and the ability owner-occupiers have to live through negative equity. Unfortunately, I can foresee both of these unfortunate events developing over the next few years, particularly an unwinding of the 'Celtic Tiger' economy we're so proud of. It's gonna be tough.

iguana

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?

Ever heard of Payment Protection Insurance? If I/or my partner get sick or lose(s) my/his job, the insurance company takes over payments. Depending on the situation (permenant illness, or death) it would even be obliged to pay off the whole thing. I'm not sure if such a thing exists for renting, so if you take the correct precautions buying is a much more secure way to have a home regardless of property prices.

CiaranC

Ok, I'll bite. (God help me)

Myself and the gf bought an apartment in a new development earlier this year, due for completion early next year.

Its 850 sq feet, own door, ground floor, under a 3 bed duplex (not in a block). Its a small development with ample parking (included in price). Build quality is excellent, judging on show house and previous phase.

Location is close to my social set and family, 10 minutes from my job and 15 minutes from my girlfriends. Luas pencilled to run outside front door, N7 and M50 within a few minutes drive.

At current rates, mortgage will run about 1400pm. I've stress tested, and we would be comfortable out to ~5%, then things will start to get tight. Repayments at current rates will be less than 25% of our combined income.

We are both graduates, with decent incomes and good prospects. Neither are dependant on multinational or construction sector coin. In fact, we are in the only growth industry in a recession - gambling! Dont plan to have kids just yet.

All in all, I'd like to move on in 5 years or so.

Reading these threads gives me a migraine. Im tempted to just stop and go all fatalistic on it. Or maybe flip the thing if we arent all living in Stephens Green come February.

miju

iguana wrote:

Ever heard of Payment Protection Insurance? If I/or my partner get sick or lose(s) my/his job, the insurance company takes over payments. Depending on the situation (permenant illness, or death) it would even be obliged to pay off the whole thing. I'm not sure if such a thing exists for renting, so if you take the correct precautions buying is a much more secure way to have a home regardless of property prices.

in the event of death they may pay the whole thing off , but you may find if your sick / unemployed they wont pay the whole monthly payment and even then they'll only pay it for x amount of time

faceman

CiaranC wrote:

Myself and the gf bought an apartment in a new development earlier this year, due for completion early next year.

Its 850 sq feet, own door, ground floor, under a 3 bed duplex (not in a block). Its a small development with ample parking (included in price). Build quality is excellent, judging on show house and previous phase.

Location is close to my social set and family, 10 minutes from my job and 15 minutes from my girlfriends. Luas pencilled to run outside front door, N7 and M50 within a few minutes drive.

At current rates, mortgage will run about 1400pm. I've stress tested, and we would be comfortable out to ~5%, then things will start to get tight. Repayments at current rates will be less than 25% of our combined income.

We are both graduates, with decent incomes and good prospects. Neither are dependant on multinational or construction sector coin. In fact, we are in the only growth industry in a recession - gambling! Dont plan to have kids just yet.

Excellent, this it the response im after. Congrats CiaranC you wont look back. Your home doesnt sound like its in Co. AsFarAwayFromDublin as most people claim FTB can only afford to buy. PLus your mortgage is 1,400euro at existing rates. Thats cheaper than alot of rents in dublin. Even if it goes up and exceeds average rents for the area then who cares. you own your place. Prices begin to fall in a few years time, who cares, you have already made in roads into your mortgage, you have a home that (hopefully) you are happy with it. Too many people assume that when prices drop everyone jumps ship and sells, but thats not the case.

Anyway best of luck dude.

SkepticOne

faceman wrote:

Excellent, this it the response im after. Congrats CiaranC you wont look back.

Please correct me if I'm wrong, but you're a landlord right? Would it not make more sense to encourage people to rent rather than buy? Is this not like an installer of satellite systems urging people to get cable?

All this rushing out to buy only leads to more building of houses and appartments by developers. Those who buy are no longer in the market for rented property and so we get stagnant or falling rents.

It may be that I'm being overly cynical here though. Fair play to you if you are just looking out for what you believe to be the interests of others at the expense of your own.

faceman

SkepticOne wrote:

Please correct me if I'm wrong, but you're a landlord right? Would it not make more sense to encourage people to rent rather than buy? Is this not like an installer of satellite systems urging people to get cable?

i see where you're coming from but theres always plenty of people in the rental market. Im been rather lucky and have a number of properties now. If people play the property game properly then anything is possible.

Its good to see people make a start with a new home thats their own. Its an exciting time but to start with a shell and decorate it your own way is very fulfilling.

Gurgle

miju wrote:

in the event of death they may pay the whole thing off , but you may find if your sick / unemployed they wont pay the whole monthly payment and even then they'll only pay it for x amount of time

Whereas with a rental, they'll pay how much before you're homeless?
€0 or so?

daveirl

This post has been deleted.

miju

beat me to it , daveirl , there's a much bigger issue missing your mortgage than missing your rent (particularly if defaulting or missing 3-4 payments on the mortgage starts affecting your credit rating)

plus i'm sure most landlords (i know mine would anyways) give you a month or two to get back on your feet and pay any arrears (especially if your a good tenant who looks after a property well) rather than turf someone out and look for a new tenant / risk unoccupancy for a couple of months

iguana

miju wrote:

in the event of death they may pay the whole thing off , but you may find if your sick / unemployed they wont pay the whole monthly payment and even then they'll only pay it for x amount of time

Depending on the circumstance they can be required to pay the full amount. It can take them 15 years to finally accept that you won't be returning to work, but in that time they are making the re-payments. My parents went through it all when my dad had to retire at 33, so I was very careful about exactly what type of PPI I got.

But I think this brings up the added risk of deciding to wait even if you are in a position to buy. My parents lived in a corporation house but were determined to buy their own home which they bought when my dad was 28. Within 5 years my dad was on a disability pension. They had decent PPI so they were never in danger of losing the house. But if they had chosen to wait a few years, for whatever reason, there was no way they would ever have been able to buy a house.

People choosing to wait aren't only gambling on a price crash. They are gambling on their health and their continued employment. I'm not saying they are wrong to wait, I don't know, but it is a factor that is due consideration.

daveirl wrote:

This post has been deleted.

While the insurance is not free, I just factor it as part of the mortgage cost, so when I say I pay £1kpm for my mortgage, I mean I pay that for my re-payment, PPI and house and contents insurance.

SkepticOne

FillSpectre wrote:

Well maybe you should learn about the place you are going then as 100 year mortgages are common and sold on with the property. THis is becasue property isn't cheap compared to salaries. You of course know better than me as you think they are all 3.5 time your salary:rolleyes:

For some reason we find 100 year mortgages strange but we completely take for granted interest-only (i.e. billion year mortgages).

humph

I would like to make a comment on the Irish Property 'Bubble'.
I live in a far away land and from my visits home I can honestly say that the standard of the majority of new housing stock in Ireland is atrocious.
I mean in respect of value , building standards , location and services available.
No one is getting value for money by any standards of other first world countries and probably has not got any value in the last few years.

The other funny ( or not so funny ) thing is that when visitors from the U.S. or Australia see what counts for a decent family house in Ireland i.e a 3 bed semi in an estate of hundreds of houses of the exact same design they are surprised to find out that it is not social/local authority housing or at most 'starter homes'.
No American or Australian middle income salary earner would aspire to live in such a dwelling.
They are called 'town houses' or 'units' or 'villas'.
A 'house' in most of the world means a stand alone detached house.
In Ireland the vast majority do not even aspire to this!
But they will certainly pay over the odds for what is available.

I think that some of the 'bulls' need to travel overseas and see what can be bought for 300,000 euro.
You will soon come to the conclusion that there is indeed a property bubble in Ireland.
Where it will end I don't know but all I do know is that it sure is not worth it to buy in Ireland now!

Gurgle

humph wrote:

A 'house' in most of the world means a stand alone detached house.
In Ireland the vast majority do not even aspire to this!

We're not allowed by our oppressive government to build stand-alone detached houses. Apparently they make the countryside look messy.

note: this is not sarcasm, thats really how it works here

squire1

Gurgle wrote:

We're not allowed by our oppressive government to build stand-alone detached houses. Apparently they make the countryside look messy.

Not true Gurgle, if you meet the "planning conditions" then there is no reason why you cant build in the countryside. (it's a lot cheaper too) The conditions are there to protect the countryside and the infrastructure but I agree that they can be very restrictive.

There has to be some sort of regulation of this or the whole place would be awash with all sorts of shapes and sizes of house along every counrty road but it's not impossible by any means.