To buy or not to buy

ZYX

Theboinkmaster wrote: »

1. Rising unemployment; unemployed people can't buy houses. This reduces demand for property.
2. Rising taxes. Taxes are rising and leaving people with less take home money. A multiple of take home money determines how much money can be borrowed to fund the purchase of properly. If people can't borrow enough to buy existing property, then prices will fall.
3. Falling wages. Many, if not most, employers are imposing pay cuts on employees either through real pay-cuts or reduced hours and un-payed leave. This has the affect of reducing gross pay and reducing available funds to purchase property.
4. Falling population. Many immigrants are leaving Ireland reducing the number of potential people who might wish to purchase property. During the boom years, foreign nationals made up a significant number of property buyers. Indeed, there evidence that there is an increase in emigration of Irish people as well. Fewer people, mean there is less properly required, reducing demand. Furthermore, those that are emigrating tend to be the part of the demographics that are most lightly to purchase property; the young.
5. Lending requirements are becoming more stringent. Banks are reluctant to lend money. If people can't borrow money to fund the purchase of property, then the price will have to fall. 100% mortgages are unheard of anymore.
6. Interest rates are at their lowest level possible. They can only go higher. In the medium to long term, they will be increased, making it more difficult to afford mortgages.
7. Negative equity. Anyone that bought property in at least the last six years are in negative equity. People in negative equity can't sell their existing property. This eliminates people who wish to trade up their existing property from the property market and thus reducing the number potential property buyers.
8. There are hundreds of thousands of empty properties in the country. At the time of writing, there are approximately 80k properties for sale on daft. And, This number does not count most of the large property developments that have been completed in the country.
9. Falling rent. Rent is falling rapidly throughout the country. It is significantly cheaper to rent than to buy.
10. Dublin property is still more expensive per square meter than, London, Paris or Manhattan. Despite approximately 40->50% reduction in prices, Irish property is still over priced in comparison to other cities throughout the developed world. This does not event take into account the fact that Dublin is a small provincial city with no real, economic or political importance. Neither is there a shortage of land for development.

Just to clarify few points:

Wages have not been cut by most employers. A minority of employers have cut wages. A smaller minority have increased wages. The majority have left wages unchanged

Popultion is not falling it is rising.

Anyone who bought in last 6 years is not in negative equity. Those who took out 100%, interest only mortgages whose property has dropped by the national average are in negative equity. The rest may or may not be.

D3PO

ZYX wrote: »

Just to clarify few points:

Wages have not been cut by most employers. A minority of employers have cut wges. A smaller minority have increased wages. The majority have left wges unchanged

Popultion is not falling it is rising.

Anyone who bought in last 6 years is not in negative equity. Those who took out 100%, interest only mortgages whose property has dropped by the national average are in negative equity. The rest may or may not be.

yep all of theses are true but I was to lazy to post it.

although i think the population point was in relation to immigration v emigration. population is only rising due to a higher number of births and 12 month olds arent buying houses yet

feelinfoul

on a slightly seperate note but still relevant i have secured planning to build a house after being assured of mortgage before seeking planning,but now bank won't lend site purchase+build amount only site amount,another bank is willing to lend build amount but both want to retain site deeds as security leaving me in limbo,because of the current situation selling the existing home is not possible/feasible(was hoping to keep and rent out once new build was completed)what would any of you do?this has been dragging on and farmer is putting pressure on for money for site,should i go ahead and borrow site amount and wait and see? o/h is eager to move out of town before kids get any older

Theboinkmaster

ZYX wrote: »

Just to clarify few points:

Wages have not been cut by most employers. A minority of employers have cut wages. A smaller minority have increased wages. The majority have left wages unchanged

Popultion is not falling it is rising.

Anyone who bought in last 6 years is not in negative equity. Those who took out 100%, interest only mortgages whose property has dropped by the national average are in negative equity. The rest may or may not be.

Wages have been cut by over 50% of employers - think it was a recent IBEC or ISME survey. Even anecdotely you should find most of your mates (in private sector) have taken a pay cut of some kind. I'd say 4/5 out of people I know have.

Population is rising but WORKING population is falling ie the birth rate is causing an increase in population but we had net emmigration in August for the first time since 1995 I think.

I think MOST who bought in past 6 years ARE in NE - even if they borrowed 90% their 10% deposit has most likely been eroded. Think latest estimates are 500,000 people in NE

Anyway the point of my post was to say that property prices are only going one way - down

D3PO

Theboinkmaster wrote: »

Wages have been cut by over 50% of employers - think it was a recent IBEC or ISME survey. Even anecdotely you should find most of your mates (in private sector) have taken a pay cut of some kind. I'd say 4/5 out of people I know have.

Population is rising but WORKING population is falling ie the birth rate is causing an increase in population but we had net emmigration in August for the first time since 1995 I think.

I think MOST who bought in past 6 years ARE in NE - even if they borrowed 90% their 10% deposit has most likely been eroded. Think latest estimates are 500,000 people in NE

Anyway the point of my post was to say that property prices are only going one way - down

I wouldnt think that 50% of people have taken paycuts in terms of their gross salary. IBEC & ISME have agendas to pursue so it suits them to come out with these kind of numbers.

would be interesting to see a poll on here to see the results.

If I take my 10 closest friends for example

5 have had a pay freeze
3 have had gross pay rises in the last year (1 private sector, 2 in public sector)
2 have taken pay cuts

id also say somebody buying with 10% deposit 6 years ago is unlikely to be in negative equity. The have been reducing their liability for 6 years plus had that 10% buffr to begin with, but i understand what your trying to say with your argument.

D3PO

Theboinkmaster wrote: »

No I don't believe we're anywhere near bottoming out. I don't think it will happen for another 3-5 years so wouldn't even consider buying until then.

1. Rising unemployment; unemployed people can't buy houses. This reduces demand for property.
.

looks like you need to scratch that one off your list. the number of people signing on in september dropped by over 16,000

Firetrap

Still an awful lot of people on the dole though..

ZYX

Theboinkmaster wrote: »

Wages have been cut by over 50% of employers - think it was a recent IBEC or ISME survey. Even anecdotely you should find most of your mates (in private sector) have taken a pay cut of some kind. I'd say 4/5 out of people I know have.

I assume you are referring to the IBEC survey which said 56% of companies has reduced their paybill. This is obviously not the same as reducing wages.

stepbar

dario28 wrote: »

Can you confirm that someone was wrong to spend an hour last night trying to convince me to buy a house , her theory is that if I buy a 3 bed house for say 280,000 in Swords -put 40,000 towards it initially and get mortage on rest then I'll owe approx 800 a month on mortage and rent it for 1200 and make money.....sounds nice in theory but Im not so sure , she reckons house prices can only go up...what ya think ??? I think house prices arent going to go up that much and also the interest rate is going to put mortages back over the 1000 a month mark plus finding someone to rent it is not going to be that easy

A 3 bed in Swords worth 280k? House prices going up anytime soon? She must be on drugs :rolleyes:

Theboinkmaster

ZYX wrote: »

I assume you are referring to the IBEC survey which said 56% of companies has reduced their paybill. This is obviously not the same as reducing wages.

OK thanka for clarifying. It would indeed be great to get official pay cut statistics - all i have to go on really is from my own friends & family

gurramok

D3PO wrote: »

looks like you need to scratch that one off your list. the number of people signing on in september dropped by over 16,000

Not so fast, propaganda i say.

Thousands of unemployed young people have been put onto Fas courses which as far as I know are not taken into account as seasonal factors like the usual back to college seasonal factor. http://www.irishtimes.com/newspaper/ireland/2009/0518/1224246811366.html
Note from the CSO release the number of unemployed under 25's decreased.

Also, migration of non-nationals from the live register should be out soon to figure out whats going on in this area. Throw in emigration as well for the Irish. Too many variants to call the bottom of the recession.

We need employment numbers for the quarter(due for 3rd quarter from CSO) to find out whats really going on.

iguana

gurramok wrote: »

Thousands of unemployed young people have been put onto Fas courses which as far as I know are not taken into account as seasonal factors like the usual back to college seasonal factor. http://www.irishtimes.com/newspaper/ireland/2009/0518/1224246811366.html
Note from the CSO release the number of unemployed under 25's decreased.

Not just Fas courses. My brother was made redundant last year and after a year of not being able to get another job he started a masters course this year. He had no intention of doing this course until he couldn't find another job. Even after he was accepted he was still hoping to get work and turn down his place. He says that a huge amount of people on his course have the exact same story. These aren't usual seasonal "back to college" numbers, these are unemployed people who are only back in education because they can't work.

gurramok

My own sister went from the dole to DIT as well, she did say it was not hard to get in on the course, interpret that whatever way one can

If all these thousands are back to education, will there be jobs for them when they finish these courses and the same can be asked of their competitors usually filtering out of colleges looking for their first job?

iguana

gurramok wrote: »

If all these thousands are back to education, will there be jobs for them when they finish these courses and the same can be asked of their competitors usually filtering out of colleges looking for their first job?

My brother doesn't necessarily think it will improve his employment prospects, but figured it beats doing nothing.

Victor

OP, be very careful. Only make a decision based on rational reasons with nobody pushing you.

Is the property actually worth the stated €280,000?

Euroland wrote: »

So, now, when the Irish economy begins to show clear signs of economic stabilisation and recovery

Was it the ESRI said yesterday that this won't happen until 2011?

I imagine property price increases will lag behind this due to the excess supply of workers and properties.

Euroland

Theboinkmaster wrote: »

1) Wages have been cut by over 50% of employers - think it was a recent IBEC or ISME survey. Even anecdotely you should find most of your mates (in private sector) have taken a pay cut of some kind. I'd say 4/5 out of people I know have.

2) Anyway the point of my post was to say that property prices are only going one way - down

1) I don't know anyone who had their salaries cut during the last 12 months and only know some people who get their salary frosen for the 2009-2010 period. Many people, includng myself, still even get thier bonuses paid.

2) The property prices' falling is almost over, now it is time for stabilisation, and some uptrend.

Euroland

Firetrap wrote: »

Still an awful lot of people on the dole though..

Even small unemployment reduction would make positive impact on the property market, increase buyers' confidence, and drive the people with postponed plans to buy some property now or it would be too late.

Euroland

ZYX wrote: »

I assume you are referring to the IBEC survey which said 56% of companies has reduced their paybill. This is obviously not the same as reducing wages.

+100%

Euroland

stepbar wrote: »

House prices going up anytime soon?

Yes, in some areas of the city they will grow at least by 30% over the next 5 years.

Euroland

gurramok wrote: »

We need employment numbers for the quarter(due for 3rd quarter from CSO) to find out whats really going on.

Monthly figures are always better as they give info up to day and reflect all the latest changes, while the quarterly results are averaging any potential improvements.

Euroland

Victor wrote: »

Was it the ESRI said yesterday that this won't happen until 2011?

1) It is always a matter of question what one means by stabilisation and recovery

2) If you look at the current Irsh statistics you would immediately notice some improvements over the previous months which indicates stabilisation and beginning of the uptrend

3) I prefer to trust myself and national statistics and not to ESRI; btw Davy as well has very optimistic views over the next 12 months period

Euroland

Victor wrote: »

I imagine property price increases will lag behind this due to the excess supply of workers and properties.

yes, they might lag for some time until investors flock back into the property market for picking up remaining bargains, and then the property prices would anticipate the economy growth.

DJDC

1) I don't know anyone who had their salaries cut during the last 12 months and only know some people who get their salary frosen for the 2009-2010 period. Many people, includng myself, still even get thier bonuses paid.

I would love to know what industries you are working in where you are still getting 2007 bonuses paid in an economy that has contracted over 10% from peak levels. Please elaborate.

2) The property prices' falling is almost over, now it is time for stabilisation, and some uptrend.

With August prices showing an acceleration in falls? Uptrend when exactly? I'd like you to be more specific rather than sounding like some idiot estate agent.

Even small unemployment reduction would make positive impact on the property market, increase buyers' confidence, and drive the people with postponed plans to buy some property now or it would be too late.

Too Late? In a market that is massively oversupplied? This is the kind of tabloid drivel that has lead to thousands of people destroyed by negative equity.

3) I prefer to trust myself and national statistics and not to ESRI; btw Davy as well has very optimistic views over the next 12 months period

This is the broker who had BUY recommendations on the Irish banks all the way through 2007 and 2008 when their prices collapsed. They are utterly incomponent and everyone in London knows it.

Look the only reason for all this optimism in the last few months is the situation in the US and Eurozone has picked up, pushing up exports and creating an escape valve in the form of emigration. In terms of the domestic economy, Ireland is still in dire straits with crippling current account problems. If the current market rally has been overdone and there is some evidence that the markets are getting nervous now (2.1% fall in S&P yesterday), then all these growth forecasts of 4% of 2010 etc. are nonsense. Any rationalist will be very neutral about Irish property prices the moment and your bullish views dont match with the economic reality.

beeno67

Euroland wrote: »

btw Davy as well has very optimistic views over the next 12 months period

Davy is predicting 0.5% GDP growth in 2010. Hardly "very optimistic". It also expects unemployment to continue to grow for next 12 months. They are more optimistic now than they were before but it is still a very depressing view of the economy.

D3PO

DJDC wrote: »

I would love to know what industries you are working in where you are still getting 2007 bonuses paid in an economy that has contracted over 10% from peak levels. Please elaborate.


.

This point is not entirely untrue. I myself still recieved my full bonus entitlement last year despite having to take a wage freeze.

I find it hard to believe the poster knows nobody who has taken a wage reduction though.

gurramok

Euroland wrote: »

Monthly figures are always better as they give info up to day and reflect all the latest changes, while the quarterly results are averaging any potential improvements.

No it does not. We need employment stats as i had stated the Live Register does not give the complete picture. Perhaps you didn't notice the hundreds(including professionals) queueing for M&S part time jobs yesterday.

Euroland wrote: »

Yes, in some areas of the city they will grow at least by 30% over the next 5 years.

You made 7 posts in a row. You're a new poster, did you research on past posts on this topic here?

Growing by 30% within 3 yrs, based on what?

stepbar

Euroland wrote: »

Yes, in some areas of the city they will grow at least by 30% over the next 5 years.

On what planet are you talking about?

Here's a frightening stat that a friend (who works in stats / risk) told me of recently..... in 2007 for every 2 houses the UK built, Ireland built 1, so in other words AFAIK 90k houses were built in Ireland in 2007 meaning that in the UK they built 180k houses. Considering that the UK has a population 10 times larger than Ireland this is utterly shocking.

Unless corresponding rent prices increase by 30% in the areas you talk of, there will be no such rise. And considering rents are on the downward scale, your thoughts are fanciful at best.

stepbar

Euroland wrote: »

yes, they might lag for some time until investors flock back into the property market for picking up remaining bargains, and then the property prices would anticipate the economy growth.

Following on from my previous post, Investors will only come back into the market when rent yields make it worth while. We have not reached that point yet by any stretch of the imagination.

To give an example -

Investment Property rates range anywhere from 2.3% to 3.3% according to BOI - http://www.boi.ie/personal/borrowing/mortgages/investment_property/index.html.

Lets say I want stability and decide to pick a 5yr fixed rate at 3.3% over 25 yrs (max). Lets also say I have the 20% deposit available or have equity in other property to make up the 20% deposit needed.

Now, to illustrate how much prices are out of touch with reality I'm going to pick the first house for sale in Dublin (on DAFT) with the following criteria:

Must be:
- a 3 bed
- semi detatched
- price less than 350k
- second hand and built within the last 15 years
- within the boundary of the M50

This the first house I got - First House

A house in the same estate is available for rent @ 1,200 p.m

Rental House

There are 6 other similer type houses for rent in Santry ranging from 1,050p.m to 1,350 p.m - List of properties

In the interest of fairness I'm going to use the average rent from the 7 properties which is 1,214 (rounded). However, I'm being extremely fair here as I'm sure if one was "actually" approaching the landlord in each case, you'd want a discount.

Now according to data I came across in work from CBRE, a rental yield of 6% is what investors should be looking for. In addition, I'm going to discount yearly rent by 10% for any expenses that you might have and are allowable against tax.

Based on this, the original house would be worth:

((1214x12) * 0.9) x 16 = €209,779 eur.. Currently the house is on offer for €320k.

Ok putting that aside for a moment lets say you decide to go for the mortgage at 80% of the price I suggested i.e €167,823 over 25 years @ 3.3%
Your monthly repayments would be €830.22 p.m. Stressed by 2% your repayments would increase to €1022.33.

At unstressed rates your gross profit would be c400eur p.m and c200eur at stressed rates.

Let's say you had exactly €209,779eur to put on deposit @ 3% - http://www.boi.ie/personal/savings_and_investment/savings/3yr/index.html
The interest in the first year would be €6293.37 Gross and €4720.03 Net (assuming a 25% tax rate)

Now..... would you buy the original house at the asking price?

bangersandmash

Euroland wrote: »

1) I don't know anyone who had their salaries cut during the last 12 months and only know some people who get their salary frosen for the 2009-2010 period. Many people, includng myself, still even get thier bonuses paid.

2) The property prices' falling is almost over, now it is time for stabilisation, and some uptrend.

Euroland wrote: »

So, now, when the Irish economy begins to show clear signs of economic stabilisation and recovery, these people would be ready to buy as any further delay with property purchase would mean buying later at higher price.

Euroland wrote: »

Last year was the highest baby boom in Ireland, and the young parents, awaiting the last 3 years for the property prices stabilisation, are now eager to buy something to have a place for growing their kids. Thousands of people had to postpone their property purchases for the last 3 years, and now when the bottom is near, it is the right time for them to buy, before the investors flock back into the residential property market, or it would be too late.

Is your bonus in some way connected to the number of outrageously optimistic and baseless claims you make about the property market? The reason I say this is that your posts make me feel like I'm reading snippets from estate agency PR pieces.

SLUSK

dario28 wrote: »

Can you confirm that someone was wrong to spend an hour last night trying to convince me to buy a house , her theory is that if I buy a 3 bed house for say 280,000 in Swords -put 40,000 towards it initially and get mortage on rest then I'll owe approx 800 a month on mortage and rent it for 1200 and make money.....sounds nice in theory but Im not so sure , she reckons house prices can only go up...what ya think ??? I think house prices arent going to go up that much and also the interest rate is going to put mortages back over the 1000 a month mark plus finding someone to rent it is not going to be that easy

Who the hell would buy a three bed semi in Swords? Someone should seriously get of the Crystal Meth