How much more of a price drop can I realistically expect here....

Essien

Myself and the girlfriend are currently in an excellent position with regards to buying a house. Both early 20's, both in full time employment, both jobs relatively secure, we also have managed to save up a reasonable chunk of cash for a deposit.

We have our eyes on one of around 10 remaining houses in a development of 54 currently being finished off. The house is a 4 bed detached with a current asking price of €150k, they peaked at €300k. They have (obviously) dropped rapidly in the past 18 months and in this period I think they may have sold only 3 or 4 of the same house type. However, with the price having recently dropped to 150k we figure they have to start selling soon.....don't they?

A lot of people are saying "go for it", "they'll never be cheaper" etc etc.
My question is this...
Are these people right? Am I holding out for a price drop that simply isn't coming or should I expect yet another drop and if so, where does it stop?

Sorry if the question is a little vague, I'm pretty sure I know what the sensible answer is here, but I'd like to hear opinions.

Thanks in advance

meditraitor

Essien wrote: »

Myself and the girlfriend are currently in an excellent position with regards to buying a house. Both early 20's, both in full time employment, both jobs relatively secure, we also have managed to save up a reasonable chunk of cash for a deposit.

We have our eyes on one of around 10 remaining houses in a development of 54 currently being finished off. The house is a 4 bed detached with a current asking price of €150k, they peaked at €300k. They have (obviously) dropped rapidly in the past 18 months and in this period I think they may have sold only 3 or 4 of the same house type. However, with the price having recently dropped to 150k we figure they have to start selling soon.....don't they?

A lot of people are saying "go for it", "they'll never be cheaper" etc etc.
My question is this...
Are these people right? Am I holding out for a price drop that simply isn't coming or should I expect yet another drop and if so, where does it stop?

Sorry if the question is a little vague, I'm pretty sure I know what the sensible answer is here, but I'd like to hear opinions.

Thanks in advance

Go for it, they might be cheaper but you seem like your in a good position financially, the price is low and a mortgage on 130k(presuming your paying 10 or 15% deposit) is feck all.
4 bedroom house in a development you like , €150k sounds alright to me

Theboinkmaster

Essien wrote: »

Myself and the girlfriend are currently in an excellent position with regards to buying a house. Both early 20's, both in full time employment, both jobs relatively secure, we also have managed to save up a reasonable chunk of cash for a deposit.

We have our eyes on one of around 10 remaining houses in a development of 54 currently being finished off. The house is a 4 bed detached with a current asking price of €150k, they peaked at €300k. They have (obviously) dropped rapidly in the past 18 months and in this period I think they may have sold only 3 or 4 of the same house type. However, with the price having recently dropped to 150k we figure they have to start selling soon.....don't they?

A lot of people are saying "go for it", "they'll never be cheaper" etc etc.
My question is this...
Are these people right? Am I holding out for a price drop that simply isn't coming or should I expect yet another drop and if so, where does it stop?

Sorry if the question is a little vague, I'm pretty sure I know what the sensible answer is here, but I'd like to hear opinions.

Thanks in advance

No those people are not right - there is a very good chance the houses will further decrease in value.

Spend some time to do lots of research on this forum and www.thepropertypin.com as i cant really answer yes or no. But think about annual rent x 14 = value rule and also if you're happy to live there for the next 20 years etc.

Property prices are currently only going 1 way - DOWN. So if that house has reduced in price by €150k whose to say it won't drop another €50k? or €80k?

Personally I'd wait it out, but does depend on your circumstances.

Best of luck!

Best of luck.

Treehouse72

Essien wrote: »

A lot of people are saying "go for it", "they'll never be cheaper" etc etc.
My question is this...
Are these people right?

No, they are wrong. Prices are falling and will continue to fall. You will save a packet by waiting even as short a time as 6 months. Wait a couple of years and you'll save a packet more.

Raskolnikov

Essien wrote: »

We have our eyes on one of around 10 remaining houses in a development of 54 currently being finished off.

Do not buy in an estate that hasn't been completely and handed over to the local authority. If the builders go bust and are unable to finish the estate, you will not be able to sell the house, and will therefore be stuck living on a building site for years.

This actually happened to my parents back in the crash in the late 80's, so don't think that I'm being overly dramatic.

mkahnisbent

If you could give us a link to the development we could better advise you. For example, there is a big difference between Dublin and Leitrim.

MRBEAVER

Mortgage would be low between two and probably less than you are paying in rent. A couple of things.
1. Only buy if you plan on living there for at least 10 years as house will probably fall further in value.
2 If builder is asking €150 he will probably take less so offer less and negoiate if necessary
3 make sure the common areas are fairly close to completion in case builder goes bust and there is mo further work done in the estate.

silverharp

OP, personally I'd wait, but then if you can buy it with a 20 year mortgage , or it only taking a reasonable % of you net pay pay then it might work. Just make sure the other owners are not in trouble, it could have a 0 value if the houses become vacant or get rented out to social cases etc.

Essien

Regarding the development.....
All common areas are completed.
I don't see the developer going bust any time soon.
Only 5 or 6 of the 10 remaining houses are yet to be completed (fwiw).
It's in Carlow.
I don't see there being an issue with houses being let out to social cases, the current owners aren't in difficulty and there are far more suitable places in the town for houses to be bought out by the council etc.

Regarding our situation...
Both still living at home.
No loans etc.
No kids.
Putting a decent lump into savings each month.

testicle

Raskolnikov wrote: »

This actually happened to my parents back in the crash in the late 80's, so don't think that I'm being overly dramatic.

What crash was this?

jetski

A decent 4 bed will cost at least €150k to build, excluding land so its value for money in that sence.

while you have declines on your side you have that as a bargainig tool although there are reports that 3 beds have stopped falling and iirc have begun to rise... i will post the link if i can find it.

you might be able to get 10k off that asking so consider that and what you will pay out on rent you cant go far wrong tbh.

mathie

jetski wrote: »

A decent 4 bed will cost at least €150k to build, excluding land so its value for money in that sence.

Just because something cost X to create doesn't mean it can't possibly sell for less than X.

OP read this forum and thepropertypin.com

- House Prices are down and continuining to fall month on month.
- Rents are down and continuining to fall month on month.
- Unemployment up and continuining up month on month.
- Wages are down. Taxes are up.
- Banks raising interest rates even before ECB base rate changes
- Banks simply not lending. (In the first 1/4 of 2010 they issued 7K mortgages)
- Harsh budget ahead in December with possibility of property tax
- NAMA
- The empties
- The negative equity. Over 250,000 estimated in negative equity (http://www.independent.ie/national-news/banks-told-to-delay-plans-for-negative-equity-loans-2260976.html)

I struggle to find one single piece of information that points to house prices increasing.

jetski

mathie wrote: »

Just because something cost X to create doesn't mean it can't possibly sell for less than X.

OP read this forum and thepropertypin.com

- House Prices are down and continuining to fall month on month.
- Rents are down and continuining to fall month on month.
- Unemployment up and continuining up month on month.
- Wages are down. Taxes are up.
- Banks raising interest rates even before ECB base rate changes
- Banks simply not lending. (In the first 1/4 of 2010 they issued 7K mortgages)
- Harsh budget ahead in December with possibility of property tax
- NAMA

I struggle to find one single piece of information that points to house prices increasing.

Well struggle no more so Link

My advise to the OP is look between the gaps, alot of the information, on boards.ie in particular is general copy & paste hype from people who know little, in particular about property.

mathie

jetski wrote: »

Well struggle no more so Link

Which part of that article points to house prices increasing?

D3PO

jetski wrote: »

Well struggle no more so Link

My advise to the OP is look between the gaps, alot of the information, on boards.ie in particular is general copy & paste hype from people who know little, in particular about property.

ah right a bunch of vested interests say the market has bottomed. It must be true so :rolleyes::rolleyes:

nothing in that article indicates anything more than the market is still depressed.

80% of houses still on the market after 6 months

64% increase in sales, great 64% of nothing is still nothing

i could pick the spin apart more but im too busy right now

derdider

mathie wrote: »

Which part of that article points to house prices increasing?

How about this part

"In a remarkable twist of expectations, prices are even starting to creep up, albeit marginally, by 0.5pc for three-bed semis and 0.4pc for three-bed terraced"

ellejay

derdider wrote: »

How about this part

"In a remarkable twist of expectations, prices are even starting to creep up, albeit marginally, by 0.5pc for three-bed semis and 0.4pc for three-bed terraced"

That's the asking prices, not sale prices.

I'd hardly quote from the Independant for an impartial or objective view on the housing economy.

http://boards.ie/vbulletin/showthread.php?t=2055972158 debate on same article.

It's just more spin by the Estate Agents. I imagine the Independants biggest advertisers are Estate Agents.

The Independant even had the likes of Brenadan O Connor, a "comedian" not an economist, writing articles on the front page no less, advising "now" is a great time to buy.
http://www.independent.ie/opinion/analysis/the-smart-ballsy-guys-are-buying-up-property-right-now-1047118.html

So Essien, for all the reasons Mathie quoted, I would advise don't buy yet. It'd be some miracle if they even stopped dropping, never mind go up.
Hold out for another price drop, it'll come.
If your dead set on it, use the rental yield formula in previous posts to gauge offer.

Regards,
Lj.

ArraMusha

Hold out for at least another 6-12 months.

If your renting its better to be doing that than losing serious money that may take decades to replenish.

mkahnisbent

Be careful about taking advice from jetski. If you had of listened to any of his advice at any stage over the past few months/years you would have lost 10s of thousands, possibly 100s of thousands.

Pricing are going to continue to drop.

Saying all that, 150k for a 4 bed in Carlow isn't a rip-off, although I think if you wait you could get it for 100k which is a saving of about 100k over the life of a mortgage.

Duckjob

jetski wrote: »

there are reports that 3 beds have stopped falling and iirc have begun to rise...

Yes Jetski, Work that buyer fear

Seriously, would you not just give that a rest ? The world and its mother know that property is still in decline, and this with interest rates on the floor. With rate hikes only getting started, the trend of decline is set only to accelerate.

Also, trying to use a few over-excited sellers in South Co Dublin to imply impending price rises in Carlow is just.... ridiculous.

KindOfIrish

Property tax and water charges in the next (or 2012) budget will affect prices as well.

mathie

jetski wrote: »

Well struggle no more so Link

My advise to the OP is look between the gaps, alot of the information, on boards.ie in particular is general copy & paste hype from people who know little, in particular about property.

Or you could take the opposite approach and go against what the majority are saying.

It sure worked out well for Brendan O'Connor...

http://www.independent.ie/opinion/analysis/the-smart-ballsy-guys-are-buying-up-property-right-now-1047118.html

Essien

I'll consider the question answered, the overwhelming opinion is to wait with the only remaining question being how long? Worst case scenario seems to be the prices just won't drop, best case being I could get it for something like 100k, that prospect alone is worth the wait.

All the while my deposit will increase while the AP (hopefully) falls. The positives far outweigh the negatives with the obvious one being a smaller loan amount which in turn will lessen the impact of interest rate fluctuation. The negatives? I'm struggling to think of any having read through the thread.

I'll sit tight so and keep one eye on the banks and the other on whatever related taxes Biffo and the boys decide to introduce/increase.

Thanks for the replies.

quozl

http://www.rte.ie/business/2010/0729/housing.html

PTSB/ESRI figures for the 2nd quarter of the year out.

Despite talk of upsurges in the dublin market, dublin as a whole fell 3.5%. More than outside dublin did.

It's always possible that there is a small, localised, dead-cat bounce in SCD - you can't tell from dublin wide figures. I really doubt it though.

I'd guess that a decline in the rate of falls is the best dead-cat bounce we'll get as I can't see the irish property market managing an actual quarter of gains, outside of tiny outliers in small sub-populations of the data.

NOTE: These figures pre-date the recent spate of variable rate mortgage interest hikes. I'd expect an acceleration in the decline next quarter.

OMD

Essien wrote: »

I'll consider the question answered, the overwhelming opinion is to wait with the only remaining question being how long? Worst case scenario seems to be the prices just won't drop, best case being I could get it for something like 100k, that prospect alone is worth the wait.

All the while my deposit will increase while the AP (hopefully) falls. The positives far outweigh the negatives with the obvious one being a smaller loan amount which in turn will lessen the impact of interest rate fluctuation. The negatives? I'm struggling to think of any having read through the thread.

I'll sit tight so and keep one eye on the banks and the other on whatever related taxes Biffo and the boys decide to introduce/increase.

Thanks for the replies.

It would seem the smart thing to do at the moment. I cannot think of any reason why prices in Carlow should stop falling in the near future.

Make sure though that you have your figures worked out. Ignore people saying what you will save over the life of a mortgage unless they have added in inflation into the equation.

One plus you should also consider is that you can still get decent 5 year fixed rates. So for example BoI is offering a 5 year fixed rate of 3.8% APR to new buyers. At this rate, on a 25 year mortgage, with a 10% deposit this house would cost €742 a month. This rate is very good and unlikely to last. Looking on DAFT €742 is about average rent for a 4 bed house in Carlow. This would represent a rental yield of about 6% on this property which isn't bad

Essien

OMD wrote: »

One plus you should also consider is that you can still get decent 5 year fixed rates. So for example BoI is offering a 5 year fixed rate of 3.8% APR to new buyers.

What are the chances of something like this being available this time next year?
I understand the benefits of taking a decent fixed rate now but surely aiming for the smallest possible loan amout (meaning saving for 12 months) would be more beneficial over the term of a mortgage.

OMD

Essien wrote: »

What are the chances of something like this being available this time next year?
I understand the benefits of taking a decent fixed rate now but surely aiming for the smallest possible loan amout (meaning saving for 12 months) would be more beneficial over the term of a mortgage.

Oh I am not saying buy now, just look at all the figures. Look at how much you can save, how much you think prices will fall, what you think rates will be and most important how important is it to you to buy rather than rent or continue to live at home. Most of the banks have calculators on their websites that allow you to fiddle with the figures in this way.

I would say there is absolutely no chance of that rate being available in 1 years time.

Zamboni

I'd agree with the idea of holding out.

But - (and I merely opint this out as to the price in the original post) are the banks not operating on a minimum of offering 150k mortgages?
I'm sure I read that they won't give a smaller mortgage (hence assisting in the creation of a false bottom in the property market.)

royston_vasey

Essien wrote: »

We have our eyes on one of around 10 remaining houses in a development of 54 currently being finished off. The house is a 4 bed detached with a current asking price of €150k, they peaked at €300k.

Essien,

Could you pm this estate. I'm also in Carlow and my situation would be pretty similar to yours.:)

Thanks

Essien

Zamboni wrote: »

I'd agree with the idea of holding out.

But - (and I merely opint this out as to the price in the original post) are the banks not operating on a minimum of offering 150k mortgages?
I'm sure I read that they won't give a smaller mortgage (hence assisting in the creation of a false bottom in the property market.)

Thats the first I've heard of that. What benefit would this be to the banks specifically? Surely they would want to minimise their risk while still staying in business, this to me would suggest smaller loans would be a good idea for them as well as the buyer.

Essien

royston_vasey wrote: »

Essien,

Could you pm this estate. I'm also in Carlow and my situation would be pretty similar to yours.:)

Thanks

PM sent


Hands off the one at the end :P