Buy now or wait?

janmc

Just a quick poll to try and see what the general opinion on the market is at the moment.

Background - we will be first time buyers, currently renting a 1 bed apt for 1300/mth in a great location. Apt itself is fine, but it's definitely not a spacious penthouse!

Can just about afford a 2 bed house in Crumlin/Drimnagh.

As our rent is expensive (and increasing), we're starting to feel that even with the current uncertainty, we'd be better off buying.

Saruman

Where is the poll?

You might have to move away from the great location. I was forced to westmeath in 2005 but i got a 3 bed detached bungalow in a lovely quiet estate for 190k, a bargain even in 05.
The distance sucks, however i can still get to Dublin a lot faster than a lot of people who live in Dublin.

thewing

Wait.....

janmc

Saruman wrote: »

Where is the poll?

Oops - should be there now

Saruman

janmc wrote: »

Oops - should be there now

yay a poll

Tim Robbins

janmc wrote: »

Just a quick poll to try and see what the general opinion on the market is at the moment.

Background - we will be first time buyers, currently renting a 1 bed apt for 1300/mth in a great location. Apt itself is fine, but it's definitely not a spacious penthouse!

Can just about afford a 2 bed house in Crumlin/Drimnagh.

As our rent is expensive (and increasing), we're starting to feel that even with the current uncertainty, we'd be better off buying.

Wait until you have a very good reason to buy e.g. you get a great deal second hand. Interest rates are going up would imply prices are going to be no great increase in prices, if anything there will be a continuing decrease until there is confidence in the property market again.

kmick

As it is not an investment but rather a family home there is no reason not to buy now. Prices have fallen and continue to do so but really it is irrelevant if you live there. If you think of it one way the rent you save 1300x12=15600 will more than offset any fall you are likely to experience in Crumlin and as the stats show first time buyers typically stay in their first home for 5 years the market is likely to stabilise over that period.

One thing I would say is (and I imagine you know this yourself) go in way under the asking price just to keep the sellers on their toes. Be careful in Crumlin as well (I lived there for a while). While it is a nice family area there are some parts which are worse than others. Make sure you visit the area and scope it out at different times of the day esp early and late evening as that seems to be when the undead emerge.

Cathmandooo

If you can only 'just about' afford this 2 bed house I would hold off as you might not be able to afford an increase in interest rates over the next year. If you're buying now you'd want to have a bigger cushion than being at your financial limit already.

I didn't spot the 'hold out for a year' option and picked wait until... I'd give the market a year to settle down. No one can predict what will happen though, it's pretty much a lottery at the moment.

mastermind2005

kmick wrote: »

If you think of it one way the rent you save 1300x12=15600 will more than offset any fall you are likely to experience in Crumlin and as the stats show first time buyers typically stay in their first home for 5 years the market is likely to stabilise over that period

house prices are falling by on average 1.1% monthly afaik

so 1.1 x 12 will add to if the market stays the same about 10% - 13% decrease P.A....


so say for arguments sake 11% of your 2 bed which id put somewhere about 300k would come to somewhere around 33k drop annuallly....

so its more like 15600 vs 33000

janmc

We were kind of agreeing with kmick - as we'll be saving on rent, it'd be worth a small drop in the market to buy now.

We went to see a house that went on the market in the new year, and there were 7 couples at the first viewing, which makes me wonder if things are changing.

Ginny

We're looking now, 2 FTBs, full approved looking to buy a 3 bed place with one of us living in it and renting a room out too.
One of the places we're interested in was selling at €450k last summer and is €370k now.
Our plan is to hold onto it for about 3-4 years, and by going in together we can afford a 3 bed which in the long run will be easier to sell when it comes to it, and is a much sounder investment.
I think if you're planning on buying and keeping it for a significant time, then go for it.

is_that_so

Don't live in Dublin but finding prices in my part of the world , having taken a dip seem to be hovering around the same price. It does seem as if prices will go down more but no-one can agree for how long. I heard the summer suggested as the lowest point by one source (can't remember who it was).

My 2c , if you really want to move and the property is within your reach I would say go for it. Interest rates by the look of it seem to have stabilised for now. And then of course there is the emotional investment in your very own home. Hard to put a price on that IMO.

Ginny

Oh and I agree about the going in under the asking price, the usual rule around here is -€20k.

Afuera

What happens when you bang the figures into this?
http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html

kmick

mastermind2005 wrote: »

house prices are falling by on average 1.1% monthly afaik
so 1.1 x 12 will add to if the market stays the same about 10% - 13% decrease P.A....so say for arguments sake 11% of your 2 bed which id put somewhere about 300k would come to somewhere around 33k drop annuallly....
so its more like 15600 vs 33000

Yeah but if the market keeps dropping at 13% a year everyone will start buying again. I figure a total correction of 25% will be as bad as it gets. We must have seen 15% of that already. So if he buys now I would guesss he should lose no more than 10%. Completely irrelevant if you are living there for 5 years or more. Bank of kmick* issues strong buy recomendation followed by medium term hold.

bank of kmick offers no guarantees. bank of kmick is not regulated by the financial services authority. prices may rise as well as fall. caveat emptor etc etc

gurramok

GinnyJo wrote: »

We're looking now, 2 FTBs, full approved looking to buy a 3 bed place with one of us living in it and renting a room out too.
One of the places we're interested in was selling at €450k last summer and is €370k now.
Our plan is to hold onto it for about 3-4 years, and by going in together we can afford a 3 bed which in the long run will be easier to sell when it comes to it, and is a much sounder investment.
I think if you're planning on buying and keeping it for a significant time, then go for it.

Whats the point of getting your own place when you have to live with a stranger for the next 3-4 years at least so as to afford the mortgage?:eek:

OP dont say where they are living now, i suspect the great location is either central/upmarket area and then trading 'down' to a perceived downmarket area in order to afford to buy something, its a trade off.

I'd wait at least 2 years for a FTB to dive in, we ain't at the bottom yet, long way to go.

janmc

Afuera wrote: »

What happens when you bang the figures into this?
http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html

That's actually very interesting. It said if we'd be staying there for 5 years, it'd be better to buy, based on rents going up by 5% per year (ours went up 8% this year) and the house appreciating in value by 3% per year.

Of course it doesn't allow for a collapse in the market.

From the poll it looks as though the vast majority is saying to wait it out.

Afuera

janmc wrote: »

That's actually very interesting. It said if we'd be staying there for 5 years, it'd be better to buy, based on rents going up by 5% per year (ours went up 8% this year) and the house appreciating in value by 3% per year.

Since that calculator is geared towards the American market you should probably also consider the stamp duty that you would have to pay if you wanted to trade up after buying now. FWIW I think that unless it is the house you want to spend the rest of your life in, it is a bit early to be jumping in to the market... there is still a lot of supply out there to suggest that it will probably get worse before it gets better.

soupie

I closed on a sale just a couple of days ago, I am buying to live so the market doesnt bother me at all. I can easily afford the mortgage and my plan is to be in it for quite a number of years by which time who knows what the market will be like.

What I would say is that if you are buying knock circa 10% of the asking price as that is what I done. I offered on three houses in total and had all offers accepted.

As long as the mortgage is not stretching you and your buying to live I dont see a need to hold off

A Random Walk

kmick wrote: »

If you think of it one way the rent you save 1300x12=15600 will more than offset any fall you are likely to experience in Crumlin and as the stats show first time buyers typically stay in their first home for 5 years the market is likely to stabilise over that period.

Oh please, they'll be paying interest on a loan as well so any savings in rent will be more than offset by interest. If you're going to justify a purchase, at least try and get your figures right.

What if the price "stabilises" at 40% less than what it is now? No matter what anyone else says here, no-one knows how far this market will fall - and there are quite a few of us who have called it right so far who think it will plummet over the next couple of years.

This thing of "if you're going to live there for a while it doesn't matter" is yet another scam phrase put out by the property industry. You might as well take a pile of cash and burn it in your back garden if it means so little to you.

Personally I think 2008 should be a wait and see year for anyone thinking of buying.

mastermind2005

kmick wrote: »

Yeah but if the market keeps dropping at 13% a year everyone will start buying again. I figure a total correction of 25% will be as bad as it gets. We must have seen 15% of that already. So if he buys now I would guesss he should lose no more than 10%. Completely irrelevant if you are living there for 5 years or more. Bank of kmick* issues strong buy recomendation followed by medium term hold.

bank of kmick offers no guarantees. bank of kmick is not regulated by the financial services authority. prices may rise as well as fall. caveat emptor etc etc

Bank of mick must be looking to sell up himself me recons...

whets your 25% total drop based on?

The prices we have these days are equivalent to about 2 years ago and they were still rising then... So Is not the prices of the houses its getting the money to buy them! if people were given the money most would buy something they cannot afford to repay and that's what happened really, loads and loads of easy money for anyone or anything that could sign their name, the whole country went property mad, now its a case of people defaulting on mortgagees and buyers not getting as much money anymore so in accordance the prices will have to lower considerably to suit the mass market..

>MM<

Colonel Sanders

maybe slightly off topic but still relevant to this thread I was just wondering if banks attitude to lending has changed over the past 6-9 months with the credit crunch we are seeing. I have read of some banks incresing variable rates by 0.1%. Just wondering have their tightened their lending criteria also.

someuser90

they are tightening their lending, which means less people have less to buy with, which reduces prices further

buying into a crashing market is financial suicide

I will wait a few years, rents have peaked too (in dublin anyway)

check out: http://daftwatch.atspace.com/ (major glut of unsolded and unrented properties)

patrickolee

I went for 'buy now if...'. My if would be that you are in a secure job, wont be streching too badly to make payments if we get 0.5% increase in mortgage rates and intend to stay where you are buying for 5ish years.

If all of those are true, then now is an excellent time to buy as its your market. The market will recover eventually and if you try to wait until the bottom you will invariably miss it as everyone else will be doing the same. Rents are rising quite quickly of late as a result of a great number of people sitting back and waiting for the 'bottom'. When all those people wake up and decide that actually the bottom has been reached (probably precipated by some RTE economist deciding the property falling story has gotten rather old!), be that in 6 months or 6 years, there will be a huge increase and you will find it difficult to find a place.

So short answer, if you're in it for a home, you have nothing to worry about; the current conditions offer an opportunity.

Ginny

gurramok wrote: »

Whats the point of getting your own place when you have to live with a stranger for the next 3-4 years at least so as to afford the mortgage?:eek:

OP dont say where they are living now, i suspect the great location is either central/upmarket area and then trading 'down' to a perceived downmarket area in order to afford to buy something, its a trade off.

I'd wait at least 2 years for a FTB to dive in, we ain't at the bottom yet, long way to go.

Hmmmmmm never said we couldn't afford the mortgage without a lodger, we can.
It also won't be a stranger, and it won't be 3-4 years, thats a lot of assumptions being made:D

ian_m

Thats good advice patrickolee.

Amberman

A Random Walk wrote: »

Oh please, they'll be paying interest on a loan as well so any savings in rent will be more than offset by interest. If you're going to justify a purchase, at least try and get your figures right.

What if the price "stabilises" at 40% less than what it is now? No matter what anyone else says here, no-one knows how far this market will fall - and there are quite a few of us who have called it right so far who think it will plummet over the next couple of years.

This thing of "if you're going to live there for a while it doesn't matter" is yet another scam phrase put out by the property industry. You might as well take a pile of cash and burn it in your back garden if it means so little to you.

Personally I think 2008 should be a wait and see year for anyone thinking of buying.

excellent general advice. As a rule of thumb in any property bubble, I normally take a view that the contraction lasts about 70% as long as the expansion lasted because fear is a stronger emotion that greed and so drives prices down faster than they rose. So I expect the bottom in the Irish housing market to be reached in about 2015-2018, depending on where you measure the start of teh boom from. Heres a nifty graph to illustrate this beautifully.

http://www.housepricecrash.co.uk/

In the meantime, give your cash to Warren Buffett to manage for you if you know nothing of investing. Ticker is BRK.B. He has a pretty good track record over that period of time. (he'll probably treble it for you in a 10 year period minimum)

dewsbury

It may seem odd but bear with me..

Prices are falling and will continue to do so.
Buy at the point that they start rising and you will know that you are buying more-or-less at the bottom.

Ginny

If you can pinpoint that moment you'd be doing good to be mortgaged approved and also get a house before anyone else in interested in it.
To be honest so far the "Crash is coming" brigade is not out on the ground buying houses and are just going on second hand knowledge, so far in the last 3 weeks i've been interested in 3 houses and they've been snapped up under my nose for the asking price, so although the prices have dropped since this time last year houses are being sold and are not going for a lot less then the asking price, well in my area at least.

How Strange

GinnyJo...If you can pinpoint that moment you'd be doing good to be mortgaged approved and also get a house before anyone else in interested in it.
To be honest so far the "Crash is coming" brigade is not out on the ground buying houses and are just going on second hand knowledge, so far in the last 3 weeks i've been interested in 3 houses and they've been snapped up under my nose for the asking price, so although the prices have dropped since this time last year houses are being sold and are not going for a lot less then the asking price, well in my area at least.

GinnyJo, in the Crumlin area - on the main Crumlin Rd into town to be exact - I drive past four houses that have been on sale since around Sept. One has a price reduced sign up and it was put up at a time when Bertie and his band of merry men were telling us that there was no property crisis and to stop worrying. I would've thought that this part of Crumlin would have traditionally been popular with couples etc trading up from apartments because of the location and proximity to town.

So in your case it must be because your area is more sought after. I know of lots of similar examples of properties just not moving. Maybe the vendors are fixed on their asking price and won't negotiate; I don't know but it is obvious that houses in general aren't selling quickly.

There is an apt on Patrick St with a sign hanging over its balcony saying 'buy me, €320k'.

These seem to be desperate times indeed.

kmick

A Random Walk wrote: »

Oh please, they'll be paying interest on a loan as well so any savings in rent will be more than offset by interest. If you're going to justify a purchase, at least try and get your figures right.

What if the price "stabilises" at 40% less than what it is now? No matter what anyone else says here, no-one knows how far this market will fall - and there are quite a few of us who have called it right so far who think it will plummet over the next couple of years.

This thing of "if you're going to live there for a while it doesn't matter" is yet another scam phrase put out by the property industry. You might as well take a pile of cash and burn it in your back garden if it means so little to you.

Personally I think 2008 should be a wait and see year for anyone thinking of buying.

I think the point I am making is that at least you will be paying your 15k towards your own mortgage rather than someone elses. As long as you can afford the payments and you do have the 10% deposit I say go for it. If it is your family home then what you gain from it compared to renting is not measurable. Screw the begrudgers who will tell you to rent a 1 bedroom shoebox for ever - paying the mortgage of some solicitor from ballsbridge.