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Why are people buying houses when prices are on the way down?

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    #62
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    In a nutshell- there are two oppossing views- housing as an asset, and housing as shelter. One has a monetary value attached to it- the other has numerous values other than monetary values associated with it. A sizeable portion of the population are beginning to view housing in its traditional sense again- aka as shelter, rather than an appreciating asset on which they intend to equity release a new car every year or two.

    Some of the comments at the Zoe circus yesterday hammered home the fact that the bubble mentality has yet to really implode on certain sectors (such as developers themselves). The manner in which they were trying to factor rental income from vacant commercial and residential units into an argument to show that Liam Carroll's group is in fact fit to go forward as a going concern- was very rightly seized upon by the judge. Though I expect it to be one of a handful of cases- it would be a breath of fresh air- if similar petitions from other developers got similar short shrift.

    We need to reinvent Ireland inc.- we have a 27.4 billion black hole in the public finances, and a private sector that is barely keeping its head above water and sinking in debt. NAMA in my eyes is ultimately going to be but a distraction- the carnage that is liable to happen when interest rates begin their inevitable increases- could be far far worse.

    Its time to take stock and use our best brains to decide how we are going to try to recover from our borrowing hangover (it could well take 20-25 years to unravel the mess), and how we can best try to find a future for all of us. Its going to get a lot messier before it gets better.......


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    #63
    mrgaa1
    Closed Accounts Posts: 759 ✭✭✭mrgaa1


    Here's an interesting graph http://news.bbc.co.uk/1/hi/business/8242825.stm also has anyone noticed there seems to be a rise in recent weeks in new threads relating to first time buyers, mortgage questions etc... Are we seeing now more genuine interest in buying because in certain areas of the country there have been substantial house price drops ? There are of course other areas that are still exorbitantly high. Are we experiencing the bottoming out of the global recession even if we are a little behind?


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    #64
    ionapaul
    Registered Users Posts: 5,297 ✭✭✭ionapaul


    Unfortunately I think we'll see a 'jobless recovery' for the first few years, so high unemployment figures may linger for much longer than we hoped. Not so certain Ireland will recover as quickly as the rest of the world - NAMA will act as a millstone around our necks and our next few budgets will be brutal, they have to be. I can't see property prices go anywhere but down for the next few years, even if they stabilise for a few months occasionally, serving as 'bull traps'.

    One thing that is encouraging from a debate point of view (here and on the Pin) is that the bulls have found their voice again (or new bulls have emerged) - remember the good arguements we used to have three / four / five years ago when certain posters claimed we'd have a soft landing and that we were not in the bubble at all (only Faceman and Gurgle are still around who were on that side of the arguement if I recall correctly) and a minority of posters argued we actually were in bubble territory. Then for the past few years, the bears were proved so correct that the bull voices fell silent. Now, a growing minority seem to believe that the fall in the property market is done (or overdone) - at least we're hearing from both sides of the debate again! :)


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    #65
    Greaney
    Registered Users Posts: 1,247 ✭✭✭Greaney


    smccarrick wrote: »
    In a nutshell- there are two oppossing views- housing as an asset, and housing as shelter. One has a monetary value attached to it- the other has numerous values other than monetary values associated with it. A sizeable portion of the population are beginning to view housing in its traditional sense again- aka as shelter

    This sums it all up really. Myself and the husband are looking for a place to live and we saw a rundown bungalow that we thought might be a good fixer upper. We then found out the asking price was €750k because it's "Zoned Residential" (duh!! wasn't it always?) and it's refer to it as an "investment". I'm thinking to myself, "the only folk in the market now are the ones looking for a home", so investment my bum!!!

    The sellers are still fooling themselves, the party's over.

    My sister recalls the last slump in London in the early 90's (when she bought) and she said it took 4 years for things to reach rock bottom cos folk just hang on thinking things'll improve. Personally, I can't second guess it too much, when we can afford the kind of house we need (factoring in things like interest flux etc) , that's when we can buy. I guess it's as simple as that. In the meantime I tell my mates, just save till you can buy. A person could spend time worrying, but you don't get paid for giving yerself and ulcer!!


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    #66
    bangersandmash
    Closed Accounts Posts: 686 ✭✭✭bangersandmash


    mrgaa1 wrote: »
    also has anyone noticed there seems to be a rise in recent weeks in new threads relating to first time buyers, mortgage questions etc...
    Would that be the "autumn selling season"?


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    #67
    di2772
    Closed Accounts Posts: 169 ✭✭di2772


    bangersandmash wrote: »
    Would that be the "autumn selling season"?

    Ive notice a lot of people i know who were holding off are getting tetchy and looking for any excuse to buy.
    Originally they were afraid prices were going to keep falling.
    They were also afraid for their jobs.

    People dont seem afraid for their jobs anymore. They also dont seem to be too worried about further falls as they can well afford the cost of the mortgage now. This and the fact that they can fix for 5 or 10 years is making them more comfortable.

    I think the only think holding them back now is the budget. They are waiting for answers to things like -

    How much more will they be taxed?
    Will there be a property tax?
    Will there be less or no stamp duty?

    Assuming all these things are favourable i think a lot of them will go for it.
    Then after that happens, people looking to trade up wil go for it too.

    But if all of those things go against them, then i think they'll still wait.

    The big thing be future job prospects though. Im finding that most people i know, who have jobs now, are much more confient of keeping them (apart from low skilled and low waged - who wouldnt be buying a house anyway).

    From my job i can also see that people are saving a hell of a lot more now than they used to too. Mortgage payment sized savings. Some will keep saving and some will probably divert those savings to mortgages - when confidence is returned.


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    #68
    AARRRGH
    Closed Accounts Posts: 12,382 ✭✭✭✭AARRRGH


    di2772 wrote: »
    People dont seem afraid for their jobs anymore.

    I have a feeling his Autumn will have a lot of redundancies. As in, companies have waited a few months to see if things will pick up, but since they haven't, they're going to have to let people go.

    Just a feeling!


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    #69
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    AARRRGH wrote: »
    I have a feeling his Autumn will have a lot of redundancies. As in, companies have waited a few months to see if things will pick up, but since they haven't, they're going to have to let people go.

    Just a feeling!

    For all our sakes, I really hope you're wrong.
    The cutbacks coming down the road already highlighted are going to depress the situation massively- if there are a raft of private sector cutbacks to be factored into the equation- it makes for a very gloomy prognosis.......


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    #70
    ParkRunner
    Registered Users Posts: 3,026 ✭✭✭ParkRunner


    I put down a deposit for a 3 bed house yesterday in North County Dublin. I have been renting for the last while and the lease is expiring at the end of the month so it was either rent for another while or take the plunge and buy a place.

    Prices may fall and interest rates will probably rise so I am hoping get a long term fixed interest rate mortgage. They are even willing to give me 100% but the price is only 4 times my salary


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    #71
    Oliver1985
    Registered Users Posts: 1,304 ✭✭✭Oliver1985


    EF wrote: »
    I put down a deposit for a 3 bed house yesterday in North County Dublin. I have been renting for the last while and the lease is expiring at the end of the month so it was either rent for another while or take the plunge and buy a place.

    Prices may fall and interest rates will probably rise so I am hoping get a long term fixed interest rate mortgage. They are even willing to give me 100% but the price is only 4 times my salary

    You must have a good job to get 100% Mortgage? I have been looking around north county to some nice places up there


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    #72
    ParkRunner
    Registered Users Posts: 3,026 ✭✭✭ParkRunner


    Oliver1985 wrote: »
    You must have a good job to get 100% Mortgage? I have been looking around north county to some nice places up there

    Im only getting the average industrial wage but the job is safe enough. The EBS/Haven are the ones really giving out 100% mortgages still so might be worth checking them out


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    #73
    Oliver1985
    Registered Users Posts: 1,304 ✭✭✭Oliver1985


    As a matter of interest how much you buy for?


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    #74
    ParkRunner
    Registered Users Posts: 3,026 ✭✭✭ParkRunner


    Oliver1985 wrote: »
    As a matter of interest how much you buy for?

    140,000


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    #75
    jeepers101
    Registered Users Posts: 707 ✭✭✭jeepers101


    EF wrote: »
    140,000

    Where in north co dublin did you get a 3 bed semi for 140000?


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    #76
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    I have a feeling its Balbriggan?

    Lots of inventory in that town for example.


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    #77
    ParkRunner
    Registered Users Posts: 3,026 ✭✭✭ParkRunner


    jeepers101 wrote: »
    Where in north co dublin did you get a 3 bed semi for 140000?

    Balbriggan it is indeed, it's terraced but that doesn't bother me


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    #78
    gamer
    Closed Accounts Posts: 2,227 ✭✭✭gamer


    Well if you look on the websites ,you ,ll see some old houses on the northside for 140k 2/3bed houses.IF you have just a lump sum with a low income buy in the next 6months if you want a house in a quiet area close to shops and not in a large housing estate.


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    #79
    Oliver1985
    Registered Users Posts: 1,304 ✭✭✭Oliver1985


    The problem is with myself I have a good wage but i only started saving 6 months ago!! There are a few propertys around my area that im interested in but ill just have to keep saving and wait!!


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    #80
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    Oliver1985 wrote: »
    The problem is with myself I have a good wage but i only started saving 6 months ago!! There are a few propertys around my area that im interested in but ill just have to keep saving and wait!!

    This response is really interesting.

    Off topic I know but I think your post reflects how the majority of people renting manage their finances.

    All the posts on this forum with the argument that renting is better than you can save and be in a better position when eventually buying etc etc always sidestep this point.


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    #81
    Oliver1985
    Registered Users Posts: 1,304 ✭✭✭Oliver1985


    Renting may be better but as soon as I have my money saved I want my own place!! Maybe its wrong but thats how I feel


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    #82
    Duckjob
    Registered Users Posts: 2,859 ✭✭✭Duckjob


    Oliver1985 wrote: »
    Renting may be better but as soon as I have my money saved I want my own place!! Maybe its wrong but thats how I feel

    It's not wrong if thats what you want.

    The majority of people on here, myself included, believe house prices have a bit further to fall yet. As to how far, and how long the fall, well - lots of different opinions on that.

    Some people here will give advice based purely on a financial decision and, on a purely financial basis, I can't see how a case can be made to buy now. However, people considering buying will always weigh up the financial and non-financial aspects.

    If you can say hand-on-heart that it wouldnt bother you in 2 yrs time to see houses around yours going for 25K / 50K / 75K less than what you paid, you should go ahead. If you think it would bother you, you should hold off and rent a little longer.


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    #83
    oceanclub
    Registered Users Posts: 3,411 ✭✭✭oceanclub


    Oliver1985 wrote: »
    Renting may be better but as soon as I have my money saved I want my own place!! Maybe its wrong but thats how I feel


    There are people who said the exact same thing several years ago, now complaining that "noone" told them prices would go down and now blaming everyone else except themselves for their decision. If you promise not to do that, good luck and go ahead.

    P.


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    #84
    dan_d
    Closed Accounts Posts: 2,819 ✭✭✭dan_d


    I know a young couple who are just married and bought a house a couple of weeks before the wedding.
    They've been renting the last couple of years, and wanted a place of their own. They found somewhere they like and they got it for a reasonable enough price. When i say reasonable, I mean in terms of the overall market today.
    People buy when their circumstances suit them to do it. Once you have bought, it doesn't matter a damn what you paid, if you're not intending to sell for profit, or sell for something bigger in a few years. It's now your home and that's the amount of money you owe. Period. If you can afford to repay, then fine. Still doesn't matter. If not.....well, then your problems start to arise. You can sit on your hands as long as you like but some people simply need somewhere to live, and are happy with something they see.
    It is actually that simple.


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    #85
    oceanclub
    Registered Users Posts: 3,411 ✭✭✭oceanclub


    dan_d wrote: »
    People buy when their circumstances suit them to do it. Once you have bought, it doesn't matter a damn what you paid, if you're not intending to sell for profit, or sell for something bigger in a few years. It's now your home and that's the amount of money you owe.

    Past experience suggests that people feel it _is_ that simple, until they realise that their new neighbour's mortgage is half theirs, in which case it is very easy to sink into bitterness.

    P.


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    #86
    mrgaa1
    Closed Accounts Posts: 759 ✭✭✭mrgaa1


    would this one http://tinyurl.com/lgcnvg be considered all the way down or just getting there? Its on daft as well so don't think its a typo.


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    #87
    Oliver1985
    Registered Users Posts: 1,304 ✭✭✭Oliver1985


    mrgaa1 wrote: »
    would this one http://tinyurl.com/lgcnvg be considered all the way down or just getting there? Its on daft as well so don't think its a typo.

    Thats very cheap but if your willing to move there?


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    #88
    20goto10
    Registered Users Posts: 1,210 ✭✭✭20goto10


    mrgaa1 wrote: »
    would this one http://tinyurl.com/lgcnvg be considered all the way down or just getting there? Its on daft as well so don't think its a typo.

    If you've ever been to Cavan you wouldn't think that's cheap!

    I haven't read through the whole thread but from what I see most people seem to be FTB's. I'm looking to move home because I feel it's time to move on to bigger and better things. I also feel if I don't move now I'll be stuck for probably the next 5 years. In fact I think I maybe stuck anyway as it doesn't look like my apt is going to sell at the price I need. If I had try to sell a year ago I'd prob be ok, so people need to realise that holding out is not always the best thing to do. It all depends on your situation.


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    #89
    Raskolnikov
    Registered Users Posts: 10,148 ✭✭✭✭Raskolnikov


    kmick wrote: »
    So my 500k mortgage seems like a hell of a lot now just like my dads 8k mortgage seemd like a lot 21 years ago.
    €500k mortgages terrify me. Young people (actually, middle aged people as well) terrify me. For the last 20 years in Ireland, we have witnessed one of the great bull-runs in property. Because it's all people have ever known, expectations have become ingrained.
    • Property only ever goes up
    • Prices (inflation) always rises

    For the first time in 20 years, prices have not just stopped increasing, they've started to fall. With this, you get a decline in asset prices (houses) and incomes. All of a sudden, your €500k house is worth €400k, your €100k salary is €80k but your debt has remained constant. The last time a scenario like this happened (outside of a wartime situation) was The Great Depression.


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    #90
    Amhran Nua
    Closed Accounts Posts: 4,124 ✭✭✭Amhran Nua


    Duckjob wrote: »
    If you can say hand-on-heart that it wouldnt bother you in 2 yrs time to see houses around yours going for 25K / 50K / 75K less than what you paid, you should go ahead. If you think it would bother you, you should hold off and rent a little longer.
    Don't forget to add the interest on that, triple it. Thats a lot of holidays.


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    #91
    Gurgle
    Closed Accounts Posts: 5,064 ✭✭✭Gurgle


    Raskolnikov wrote: »
    All of a sudden, your €500k house is worth €400k, your €100k salary is €80k but your debt has remained constant.
    Your repayments have dropped too, with lower interest rates. No, they aren't going to stay low forever, the recession isn't going to last forever.

    Your house may only be worth €400k now - Does it matter?
    Only if you were planning to sell it.


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