Am I mad to buy now?

efb

Interested in a house, happy with the price, am I mad to buy now?

Its near my parents and come down alot from the asking price.

Blackjack

Probably. If you wait longer, Property will cost you a lot less.

Mr. Loverman

efb wrote: »

Interested in a house, happy with the price, am I mad to buy now?

Not mad, but it does not make financial sense to buy now.

efb wrote: »

Its near my parents and come down alot from the asking price.

Forget about the original asking price. The prices around the bubble, and for the past few years, were insane. You should not compare prices to them when determining value.

If you can tell us more about the property (location, size, type of property, etc.) we will be better able to advise you.

Few things to ask yourself
- are you in really stable employment, unlikely to relocate for work for the next 10 years
- does the house have enough space should you have kids etc
- Whatever the mortgage payment will be could you afford to pay €300/ €400 more per month should interest rates rise drastically

Also keep in mind the current asking price may still be far too high and no one else may be at all interested in it so don't rush in and don't swallow any sh1t from the auctioneer.

ArraMusha

Have a read of this ...particularly 'treehouse's post which sums up the state of affairs related to house prices..

http://www.boards.ie/vbulletin/showthread.php?t=2056037903

efb

Well it would cost more to build the property now, than to buy it and there's huge development potential.

Why does it not make financial sense to buy now?

Newaglish

efb wrote: »

Interested in a house, happy with the price, am I mad to buy now?

Blackjack wrote: »

Probably. If you wait longer, Property will cost you a lot less.

efb wrote: »

Why does it not make financial sense to buy now?

efb

Newaglish wrote: »

I just cant see how it would cost less, there is no house its size or quality in the price range and my other option was self build so this is cheaper.

Should I put in an offer of asking price less 10%

Mr. Loverman

efb wrote: »

Why does it not make financial sense to buy now?

You need to spend a few weeks reading http://www.thepropertypin.com

Mr. Loverman

efb wrote: »

I just cant see how it would cost less, there is no house its size or quality in the price range and my other option was self build so this is cheaper.

Land prices going down?
Builders prices going down?
Materials prices going down?

Come on, think about it.

tenchi-fan

When property prices begin to rise they could jump 10-20%. However, don't expect that to happen for many years! They could continue to fall in the meantime but realistically, how much you they fall? Considering that the alternative is to pay a lot of rent. And interest rates are still relatively low. Now's the time to buy if you get a good price.

A good tip is to put in an offer - immediately! A ridiculously low, derisory offer. About 30% less than the price you think you are happy with. Just to see what they say. And don't just make an offer on that house.. go around all the estate agents and make as many offers as you like, all low, and hopefully you will get a bargain. if they tell you to take a hike, just keep an eye on it and perhaps make another offer a month later, only slightly higher. Go as far as giving the deposit if you like - it's not going to make any difference until you actually sign along the dotted line.

Mr. Loverman

tenchi-fan wrote: »

Now's the time to buy if you get a good price.

The amount of times I've head that over the past few years... everyone who tried to give me that advice is now in deep negative equity.

efb

Thanks guys, I appreciate all the advice esp the explained ones rather than the kurt one liners.

I think I will make an offer in the morning of AP less 10% - well beneath my threshold and if they dont like it this 30 year old will stay at home.

Mr. Loverman

efb wrote: »

Thanks guys, I appreciate all the advice esp the explained ones rather than the kurt one liners.

I think I will make an offer in the morning of AP less 10% - well beneath my threshold and if they dont like it this 30 year old will stay at home.

Why 10%?

You do realise prices have supposedly dropped 9% in the past 5 months alone?

Most sane economists think the recession is going to last a few more years, so that's a lot of 5 months...

By all means pay whatever you want, but if you do it without doing proper research you will only have yourself to blame when you're in negative equity.

efb

Because they dropped the price by 25% last week

efb

Mr. Loverman wrote: »

Why 10%?

You do realise prices have supposedly dropped 9% in the past 5 months alone?

Most sane economists think the recession is going to last a few more years, so that's a lot of 5 months...

By all means pay whatever you want, but if you do it without doing proper research you will only have yourself to blame when you're in negative equity.

I am not buying it as an investment, I am buying somewhere to live for the next 30 years.

Another thing to keep in mind is that there is an awful lot of folk out there who could never afford their own place when things were good, now things are bad they still have f all chance of doing so. Many of these folk would love their own house but know it's not going to happen, these folk love typing about negative equity and how low house prices may still get Personally I don't have a clue how the property market will go.

efb

I think I'll talk with a QFA too

Mr. Loverman

efb wrote: »

Because they dropped the price by 25% last week

That really means nothing.

efb wrote: »

I am not buying it as an investment, I am buying somewhere to live for the next 30 years.

Fair enough, negative equity is irrelevant if you plan to stay in your home and are certain you won't be forced to sell.

Mr. Loverman

RoverJames wrote: »

Another thing to keep in mind is that there is an awful lot of folk out there who could never afford their own place when things were good, now things are bad they still have f all chance of doing so. Many of these folk would love their own house but know it's not going to happen, these folk love typing about negative equity and how low house prices may still get.

I don't think that's the case at all.

I am bearish about the market because it is obvious.

I could easily afford a decent house in Dublin.

efb

Mr. Loverman wrote: »

That really means nothing.




Fair enough, negative equity is irrelevant if you plan to stay in your home and are certain you won't be forced to sell.

You said prices dropped 9% I was showing how Im not paying a 2007 or 8 price, cetainly not, the next house is €20K dearer, and a semi d.

Mr. Loverman

efb wrote: »

You said prices dropped 9% I was showing how Im not paying a 2007 or 8 price, cetainly not, the next house is €20K dearer, and a semi d.

Yes, but property in Ireland is still insanely overpriced.

We have about another 50% to go.

Mr. Loverman

Mr. Loverman wrote: »

I don't think that's the case at all.

I am bearish about the market because it is obvious.

I could easily afford a decent house in Dublin.

I was not on about you specifically, although most of the folk I am on about do come out with the "I could easily afford ......................"

Blackjack

RoverJames wrote: »

I was not on about you specifically, although most of the folk I am on about do come out with the "I could easily afford ......................"

I could easily afford a 3 Bedroom Semi D in almost all parts of Dublin.

I'm waiting until they're a lot cheaper, so that I can buy a 3 Bedroom Semi D in All parts of Dublin, and maybe even something a little bigger.

efb

Mr Loverman,
I am not questioning you for 1 second, I just want to put a weight behind people's opinions, and yours is quite strong, what is your field of of work?

Blackjack

Blackjack wrote: »

I could easily afford a 3 Bedroom Semi D in almost all parts of Dublin.
.

How old are you and what do you do for a living ?

Blackjack

RoverJames wrote: »

How old are you and what do you do for a living ?

Old enough to know that now is not a time to buy, and wise enough not to tell people what I do on the Internet....

I'm not a first time buyer if that makes any difference.

Mr. Loverman

efb wrote: »

Mr Loverman,
I am not questioning you for 1 second, I just want to put a weight behind people's opinions, and yours is quite strong, what is your field of of work?

Statistics.

You are right, my opinion is very strong, but that's because I think what's happening is so obvious, and frankly has been obvious for years.

Write down the average wage on a piece of paper and then multiply that value by about three and a half. Historically that's how much it should cost to buy an average home, e.g. a three bed semi-d.

So when I say an average three bed semi-d will cost 150k I am being optimistic.

When thinking about property you need to completely ignore 2002 - 2010. They are the insanity years and have little bearing on reality.

tenchi-fan

Mr. Loverman wrote: »

The amount of times I've head that over the past few years... everyone who tried to give me that advice is now in deep negative equity.

Obviously they didn't get a "good price"!

Mr. Loverman

tenchi-fan wrote: »

Obviously they didn't get a "good price"!

They thought they did though... that's why I think most people shouldn't make decisions based on what they think is a good price.

barochoc

I agree with Loverman, Property here has been way over valued for so long, we're still a long, long, long way off correction.

About 15 years ago I could buy an apartment in the City center for around £40-50K. I thought this was insane because Semi-D's where I lived where around that price.

I held off for a bit & didn't take much notice of Property as I was only 20 so didn't really want to commit but my Father was pushing me. What is it with Irish People & "You must own a property"???????

Anyway, only a few years later things were really picking up in the economy & it seemed everywhere you looked someone was building or buying a house. I decided to have a look & nearly got sick when I seen people pay £100K+ for a house that was only £50K 4-5 years ago. That was WAY too much inflation for me & I couldn't justify it because the people I knew with Mortgages only payed maybe £250-300 a month over 15-20 years which was a very small fraction of their wages. It was no way Jose for me!

Fast forward about 10 more years & it spirals out of control with people paying €2000-3000+ a month on their mortgage over the same term with some poor feckers having to lessen the load... say €1500 per month over 25-30 years!!! I was & still am disgusted at how this was allowed to happen :mad:

Anyway, we're borrowing at stupid interest now because our credit rating is slaughtered. We're no where near this recession bottoming out yet. Very few people are willing to buy houses because they're looking at all those around them struggling & almost suicidal because they'll never see their property fully recover before they retire & they're stretched to the limit.

There's no doubt in my mind what so ever that we'll see a further 25-30% drop in the next year or two because supply far outweighs demand at the moment & the banks have NO money to lend.

So, If you have a spare couple of hundred grand lying around & are afraid it will rot then go for it. If you're the type to feel bitter & hard done by when the price of your property falls by 20-30% then don't!

Why would you want to pay someone 20-30% more for something than it's already worth (And that's just a conservative figure it'll possibly be 50% cheaper in 4-5 years)?

Keep your money for a while longer. Put more away each month towards a deposit in a few years. This will be the time where the bank will probably be knocking on your door to offer you the money as they'll be desperate to kick off again.

Just my tuppence worth