Am I mad to buy now?

efb · 21-09-2010 10:23pm

Mr. Loverman wrote: »

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.

3.5 actually gets e to my asking price!

Mr. Loverman · 21-09-2010 10:24pm

efb wrote: »

3.5 actually gets e to my asking price!

Sounds good so.

Enjoy!

efb · 21-09-2010 10:25pm

Mr. Loverman wrote: »

Sounds good so.

Enjoy!

Thanks.

Will put in the offer tomorrow and leave the ball in their court, go to Spain and enjoy my holiday!

Senna · 21-09-2010 10:39pm

efb, the mortgage been 3.5 times your wages mean that you wont be stretching yourself, but has little reflection on value. We dont know the house or area, so only you can judge that.
The question you have to ask yourself is, if you buy the house now and the price of the house next door is 10% or 20% less in a years time, will you still be happy with your decision?

johndaman66 · 21-09-2010 10:40pm

Mr. Loverman wrote: »

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

Come on, think about it.

Land prices may well be going down and so too may builders prices, or at least the cowboy builders prices but materials prices?... Maybe you'd want to recheck that one. Glass, timber and concrete certainly ain't going down in price to at least name a few.

Mr. Loverman · 21-09-2010 10:48pm

johndaman66 wrote: »

Glass, timber and concrete certainly ain't going down in price to at least name a few.

Why won't these go down in price - surely supply and demand determines their price?

johndaman66 · 21-09-2010 11:25pm

Mr. Loverman wrote: »

Why won't these go down in price - surely supply and demand determines their price?

Yes fair enough but bear in mind that Ireland is a small open economy too. Much of our building materials is imported and even much of the building materials produced here is exported. Just because demand in the domestic economy is not as strong here is does not automatically follow that the prices of building materials will drop for afore mentioned reason. Although I can't say Ive an index for building material prices immediately available to hand I can pretty much guarntee you that if you went into Brooks or Heiton Buckleys with a shopping list tomorrow for a broad spectrum of building materials the quote they will give you will be higher than it was 2/3 years ago.

22-09-2010 12:09am

Mr. Loverman wrote: »

Why won't these go down in price - surely supply and demand determines their price?

Come on, think about it

Mr. Loverman · 22-09-2010 12:40am

johndaman66 wrote: »

Yes fair enough but bear in mind that Ireland is a small open economy too. Much of our building materials is imported and even much of the building materials produced here is exported. Just because demand in the domestic economy is not as strong here is does not automatically follow that the prices of building materials will drop for afore mentioned reason. Although I can't say Ive an index for building material prices immediately available to hand I can pretty much guarntee you that if you went into Brooks or Heiton Buckleys with a shopping list tomorrow for a broad spectrum of building materials the quote they will give you will be higher than it was 2/3 years ago.

RoverJames wrote: »

Come on, think about it

You're actually both wrong.

A quick bit of googling throws up loads of results about building materials going down in price in Ireland.

Some materials have increased in price, but overall they have been going down for the past three years.

Random quote:

"Building and Construction All Materials Prices decreased by 4.8% in the year since October 2008".

No offence, but it's a bit naive to think prices can't go down. That's the sort of mentality which got Ireland into the mess it's in.

magentas · 22-09-2010 10:58am

efb wrote: »

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

I think that's what it all comes down to, you're buying a home not an investment.

The "don't buy now" bridgade shouting "negative equity" is irrelevant to someone looking to spend the rest of their lives in this house.

efb, if you can comfortably afford it and are 100% happy with the house and have done all your research then go for it

only thing I'd recommend is to get a good fixed rate so you will know your repayments for first few years as interest rates look to be unstable for the foreseeable future

don't be embarressed to put in a relatively low offer, this is the biggest purchase you will ever make

Best of luck and let us know how you get on;)

Treehouse72 · 22-09-2010 1:00pm

NOBODY ON THIS FORUM IS TALKING ABOUT PROPERTY INVESTMENT.

It might just sound like it. Talking about buying at a good price is simply a proxy for codifying improvements in your QUALITY OF LIFE over the lifetime of the mortgage. It is NOT a form of property investment advice. Just because it is your PPR does not mean the price doesn't matter.

Why on earth do people find it so hard to understand that if you buy at €300,000 and the price drops 20% subsequently that that is €60,000 in principle added to your mortgage and maybe twice that amount once interest, fees and charges are included. Is advising you not to spend €100,000 property investment advice? Or is it advice to try and put €100,000 in your pocket to spend on holidays, time off work, a university education for your children, a pension, or a big stupid Ferrari if that makes you happy? Come on, for the love of Christ this is simple bloody logic.

If a Mars bar cost €5 and someone advised you not to pay this much, would you turn around and say "But I want some chocolate so I'm going to buy it"? No. You'd either forego your desire or you'd go out and buy a Doubler Decker instead. Is this investment advice? Or is it advice that the opportunity cost of that chocolate bar is too high?

And for Mars bar read an overpriced house, for Double Decker read renting or deferring the buying decision for 12 months.

Whatever. People come onto this forum to have their decisions justified, not to seek advice. OP in this thread is an example. He/she has not engaged with any of the advice not to buy and has dismissed it out of hand. Fine, onwards and downwards.

Zamboni · 22-09-2010 1:11pm

Treehouse72 wrote: »

Whatever. People come onto this forum to have their decisions justified, not to seek advice. OP in this thread is an example. He/she has not engaged with any of the advice not to buy and has dismissed it out of hand. Fine, onwards and downwards.

Yep.
I'm genuinely surprised these threads are still coming up.

McTigs · 22-09-2010 2:53pm

Yeah to be honest by now i am just exausted with people saying that "it's a house to live in for life not an investment so the price doesn't matter"

OF COURSE IT ****ING MATTERS!!!!!!

As treehouse has said in several times in various threads, and it's not complicated, why overpay for a house and deny yourself all the things both tangible and intangible that saving the difference can bring.

Whether or not you ever plan to sell those house on or not is completely irrelevent.

But ya know what, do what ye like, i know what i'm doing

efb · 22-09-2010 5:43pm

Quelle Suprize, the original bidder now has access to the cash, so I said to the auctioneer, I hope he's happy in his new house.

I'm not entering a bidding war in a recession!

I'm holding fire now 'til post Dec 7, 2010

Mr. Loverman · 22-09-2010 7:51pm

efb wrote: »

Quelle Suprize, the original bidder now has access to the cash, so I said to the auctioneer, I hope he's happy in his new house.

I'm not entering a bidding war in a recession!

I'm holding fire now 'til post Dec 7, 2010

Well done.

The other bidder could easily be a ghost bidder... please let us know if the estate agent rings you back saying the other bidder has mysteriously dropped out...

johndaman66 · 22-09-2010 8:51pm

Mr. Loverman wrote: »

You're actually both wrong.

A quick bit of googling throws up loads of results about building materials going down in price in Ireland.

Some materials have increased in price, but overall they have been going down for the past three years.

Random quote:

"Building and Construction All Materials Prices decreased by 4.8% in the year since October 2008".

Please provide me with a link to back up above, as speaking from the point of view of somebody who is aware of the very most of the range of building material prices over the last number of years your point is at odds with the reality of the situation from my experience.

Mr. Loverman wrote: »

No offence, but it's a bit naive to think prices can't go down. That's the sort of mentality which got Ireland into the mess it's in.

Eh? I dont for one minute think that the prices of houses cant go down as they are falling presently and likely for some time to come. But if we are talking about construction prices for new houses then a distinction needs to be made. As we have already established this is predominantly made up of land prices, labour prices and material prices. It seems that land prices for residential purposes are going down but not easy to make an exact judgement on this either as there is so little activity happening in this regard and such information is not readily available for public consumption either. Labour prices, as I say perhaps maybe for cowboy builders but for the reputable builders....I'm not so sure...will need convincing. As for material prices and as I mentioned would like to see a link to back this up as your point seems to be at odds with the reality. I don't believe I'm being naive, rather looking at the reality of the situation of whats happening.

Also not sure of the exact date and these things change in the interm but last time I heard it was 2015...From this date all new builds in Ireland are required to be energy neutral. A quick read of the planning and constrution forum and you might be unpleasantly surprised with the hugh cost of geothermal, solar panels, wind turbines and the like.

efb · 22-09-2010 9:10pm

Mr. Loverman wrote: »

Well done.

The other bidder could easily be a ghost bidder... please let us know if the estate agent rings you back saying the other bidder has mysteriously dropped out...

will do, I'd say "the cash flow probs would return..."

Mr. Loverman · 22-09-2010 10:23pm

johndaman66 wrote: »

Please provide me with a link to back up above, as speaking from the point of view of somebody who is aware of the very most of the range of building material prices over the last number of years your point is at odds with the reality of the situation from my experience.

Here's the link: http://www.kmcs.ie/KMCS%20Construction%20Industry%20Outlook%202010.pdf

Doing some more googling I'm finding conflicting information. Some reports are saying prices have gone up, some are saying they have gone down, and some are saying they are fluctuating.

Regardless, I don't buy into the theory that buildings materials won't decrease due to less demand.

johndaman66 · 22-09-2010 11:29pm

Mr. Loverman wrote: »

Here's the link: http://www.kmcs.ie/KMCS%20Construction%20Industry%20Outlook%202010.pdf

Doing some more googling I'm finding conflicting information. Some reports are saying prices have gone up, some are saying they have gone down, and some are saying they are fluctuating.

Regardless, I don't buy into the theory that buildings materials won't decrease due to less demand.

Ok, fair enough the article does suggest that building and construction material prices fell by 4.8% in the year October 2008 to October 2009 of which I would actually be sceptical but will take it at its face value all the same. However, it does say that this trend has changed recently (article being published in December 2009) and in October 2009 prices increased by 0.2%. It further goes onto say and I quote:

[/QUOTE]It is expected that Global economic conditions over the next 12 months will improve and due to a consequent increase in cost of globally traded commodities an increase in input costs will pass through to the Irish market. This has started to happen as illustrated by the recent increases in the Building and Construction Material Wholesale price Index[/QUOTE]

As you say yourself there are also other articles to show conflicting information and judging by my own personal experience I would seriously question if there were any price decreases over the past few years. My over-riding point is that in the scheme of things demand in Ireland would have very little impact on material prices be they in Ireland or elsewhere. A fair amount of our material inputs are imported. Changes in exchange rates can obviously have a hugh impact on price of building materials imported from UK or timber from Scandanavia for example. As the somewhat out of date article says material prices are expected to rise through 2010. Think furthermore the article is looking more specifically at infrastructe projects and larger commercial building projects with reference made specifically to reinforcing metal and structural steel but I'm getting pedantic now:D

Don't really want to be splitting hairs with you over this either and we are going of in a tangent from OP's initial query also. Point is that construction costs may (may not) be going down overall but I don't feel it wise to lump in input materials in this forecast.

Am I mad to buy now?

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