Is it madness to buy our first home now??

radharc

Hi everyone, would just like to hear some opinions and advice from all. This forum seems to be very knowledgable and very pessimistic which is definitely not a bad thing given I've spent the last month listening to estate agents and banks basically pretend there's no such thing as the recession!

Having just got married in May we are looking to buy our first home - we are close to having an offer accepted.

I have read through the "Bubble Bursting" sticky in this forum and everything makes sense but I guess my question is whether that thread applies more to investment property...is it madness to buy a house now if we plan on settling down there for the long term even if I don't doubt it will probably be worth less in 1/2 years' time?

Also worth mentioning we can get Mortgage Interest Relief if we buy before December (worth around 17k over 7 years in our case) I'm eager to hear opinions...

Spiritofthekop

There is very little value out there right now. Daft.ie is a wash with delusional estate agents who only care about commission.

House's will keep dropping in price for another 5- 10 years.

You can come across some diamond house's & some value in them if your lucky & you will know when its value for money.

I would not touch 80% of the properties on Daft.ie at the moment. The other 20% the location is the problem for me.

cgarrad

Is it madness to buy our first home now??


Utter and total.

Hold out till 2014 and reap the rewards.

jimmycrackcorm

What would be so wrong about renting for a while? You need to watch the market so see how much prices are dropping.

jethrothe2nd

We are in the same boat, radharc. Got married in April, and my wife is now pregnant. Financially we are probably in the best position we will ever be in for buying a house. So we are going to.

The way I look at it is, if the time is right for you,and you find the right property at the right price then go do it. Who knows what this year, next year, 2014 will bring.

Good luck with whatever you decide to do

Tigger

jethrothe2nd wrote: »

We are in the same boat, radharc. Got married in April, and my wife is now pregnant. Financially we are probably in the best position we will ever be in for buying a house. So we are going to.

The way I look at it is, if the time is right for you,and you find the right property at the right price then go do it. Who knows what this year, next year, 2014 will bring.

Good luck with whatever you decide to do

I do.

It will bring tax hikes and house price drops. Interstate rate rises and reposessions

Don't buy ( or do buy I call it as I see it)

I war ed people in 06. And in 07. I really really surprised I'm warning them in 11

fricatus

It's not always easy to time the housing market. I bought in 2006 because I was getting to the point where getting a 25+ year mortgage was going to be difficult because of my age. Sometimes you just need to do it. You don't need the hassle of renting either, and when you've the house paid for, you never need to pay rent again. Despite all the doom and gloom, I will nevertheless have my place paid for before I'm 60 and won't have to pay for housing then for the rest of my days.

Having said that, there is absolutely no reason why you should pay over the odds for a house in this market. If someone won't sell to you for a realistic price, walk away. If you can't find somewhere that's right for you, walk away. If you can't find somewhere that you could either sell again quickly for no loss, or else rent out easily, walk away.

Probably the best piece of advice for you is with regard to valuations. Many commentators reckon that you should pay about 14 times annual rent for a property, so if the monthly rent is a grand, then the house should be priced at €168,000. If it's wildly out of line with that benchmark... walk away!

iguana

It's not madness, you are at the point in your life where you want to own rather than rent and have the means to do so. It's natural to want to want to buy. But how will you feel if 2 years from now prices are half of what you buy for? If you could have bought with a 15 year mortgage instead of a 25 year one? If you could have had an extra bedroom, detached instead of a semi, a south west facing rear garden instead of east, or been closer to work/train/park/etc.

Because that is what will happen, we mightn't be able to tell the future, but cause and effect isn't that hard to work out and the economy is still borked and prices have an awful lot further to fall.

ankles

There might be valid reasons to buy now, for you personally. What I would say is firstly ignore the sticker prices, do your research, establish the floor price in the area, and then put in a bid at least 20% below that and see where you get. I don't think there are any bids out there so if you have loan approval you're way ahead.

You should think about whether you are buying for life or intend to trade up in the future. While the market is going to bump along the bottom for at least another five years (and probably twice that), if you will be selling remember that when you are buying.

I'm in negative equity, and up against it, but I know I'm in this house for the long run, so I don't really care what prices do. I never got taken in by the huge increases and people's obsession with their "worth", so it doesn't bother me too much now that our house price has dropped. At the end of the day if you want a home you'll buy one. If you want to be a property speculator then you can rent and bide your time.

Theboinkmaster

jethrothe2nd wrote: »

We are in the same boat, radharc. Got married in April, and my wife is now pregnant. Financially we are probably in the best position we will ever be in for buying a house. So we are going to.

The way I look at it is, if the time is right for you,and you find the right property at the right price then go do it. Who knows what this year, next year, 2014 will bring.

Good luck with whatever you decide to do

Abolsutely terrible advice. Mad to buy your first home now? YES it fxxking is.

Who knows what this year, next year etc will bring? We do - significant property price declines. How would you feel if you buy a house today for €400k and in 2014 you saw that if you waited 3 years would could have bought it for €250k? you may as well burn your cash to buy now IMO.

Prices WILL fall further, much much further.

Balmed Out

ankles wrote: »

At the end of the day if you want a home you'll buy one. If you want to be a property speculator then you can rent and bide your time.

I agree with all you said but that comment, I dont think its fair.

OP Im in my mid 30s have wanted to buy a house for over 10 years but there isnt value yet. How will you feel if you buy a house and find its a whole years salary cheaper in 12 months? Its your life but the amount your mortgage payments run at will have a big factor on your future happiness.
Im getting married next June but im determined to hold out on the (her) nesting instincts until we have a child of toddler age.

OMD

Balmed Out wrote: »

I agree with all you said but that comment, I dont think its fair.

OP Im in my mid 30s have wanted to buy a house for over 10 years but there isnt value yet. How will you feel if you buy a house and find its a whole years salary cheaper in 12 months? Its your life but the amount your mortgage payments run at will have a big factor on your future happiness.
Im getting married next June but im determined to hold out on the (her) nesting instincts until we have a child of toddler age.

It's all hindsight really. If you bought 10 years ago with a 20 year mortgage you would be in a much better position than renting for last 10 years especially if you had a tracker mortgage in terms of overall cost.

fricatus

Balmed Out wrote: »

I agree with all you said but that comment, I dont think its fair.

OP Im in my mid 30s have wanted to buy a house for over 10 years but there isnt value yet. How will you feel if you buy a house and find its a whole years salary cheaper in 12 months? Its your life but the amount your mortgage payments run at will have a big factor on your future happiness.
Im getting married next June but im determined to hold out on the (her) nesting instincts until we have a child of toddler age.

This is a good point in fairness. Nobody should rush into buying a house in the current climate (not that they ever should...) because even when prices do start to recover, they will definitely "bump along the bottom", so you're not going to get caught out by 10% pa increases any time soon - the likely 1-2% pa in any recovery is not a big risk.

The only thing is that people's circumstances don't always allow them to time their purchase so easily. Approaching age milestones (like turning 40), pay rises or promotions, the arrival of a child, etc., all influence the decision.

The main thing then is not to pay asking prices. There is value out there. A mate of mine has bought a decent 2-bed apartment in Dublin for €125k. The asking price was €165k, reduced from about €190k (similar ones had been going for over €260k during the boom). He has a 15-year mortgage, and is paying less now than he was renting for before!

Yes there's risk out there - he could lose his job for instance, but IMO that's a good deal he's got for himself.

Mr. Loverman

Buying now is an emotional decision.

Emotions are fleeting. Negative equity isn't.

Make sure whatever decision you make is based on logic and knowledge. Try to disregard your feelings.

catbear

Whatever tax reliefs you may get over several years by buying before december may be wiped out by property taxes. Check out the rates in England or NI for comparison.

The market is still collapsing and we still haven't got an accurate property database which makes it more guess work, and as rents are still falling I won't be buying. The house we currently rent is annually losing three times in price what we pay in rent so I'm still saving. When the drops become less than what I pay annually in rent then I'll think about buying.

Edited to add: I just worked it out, last year our rental lost 15 times our annual rent in asking price. ouch!

mariaalice

If you want to be sure maybe now is not a good time, but people buy a home for all sorts of reasons and as long as it home for the foreseeable future then why not do it now and get on with you life, you could keep punting it off for ever in the hope of finding the mythical right moment. I think for some people finding that right moment has become like a quest, but in reality its turned in to an excuse never to do anything.

Mr. Loverman

mariaalice wrote: »

If you want to be cretin maybe now is not a good time, but people buy a home for all sorts of reasons and as long as it home for the foreseeable future then why not do it now and get on with you life, you could keep punting it off for ever in the hope of finding the mythical right moment. I think for some people finding that right moment has become like a quest, but in reality its turned in to an excuse never to do anything.

Why can't he just rent, get on with his life, and in a few years buy a house for a lot less cash? Seems simple to me and doesn't sound like an excuse to never do anything.

catbear

mariaalice wrote: »

If you want to be cretin maybe now is not a good time,

Being financially prudent is being a cretin, a bit Bertie Ahernish don't ya think?
Personal wealth is not just how you house yourself.

inforfun

If it is just the 2 of you, keep renting.

I could understand (not exactly agree) that if their are already kids or they are on the way, that a house of your own sounds more appealing.
With renting you run the risk you have to move every year. But for me personally that risk would be a very small price to pay.

snubbleste

You have already decided OP, you've stated you are looking to buy your first home and put in an offer.

syklops

Financially we are probably in the best position we will ever be in for buying a house.

The logical conclusion of this statement is that in the future you will be in a worse financial position than you are now. With that in mind I hope you are not basing your mortgage repayments on what you can afford now, but are instead basing them on what you could afford in future austere times.

Snakeblood

I don't think that now is the worst time to buy, but prices will continue to fall. I suppose it depends on age\situation. If you are getting up to mid 30s, or are having a family, then you might want to think about it. With that said, I'm in my mid 30s, with a family, and could be in a position to buy, but I'm holding off because I personally think more drastic drops are coming.

mathie

People who are saying houses will be X down in X years time are only guessing.

Nobody has a crystal ball.

Was it mad to buy in 06 / 07 when everyone was saying to buy? Yes.
Is it mad to buy in 11 when everyone is saying not to buy? Who knows?
Time will tell.

If you can get a good deal then I'd go for it.

I speak from experience. We bought early this year.
We got 25% off the current average (and 60% off peak) in the area as the seller was desperate.
We'd a large chunk of change that was earning very little interest.

A lot of conditions will dictate if it's a good or bad time for you personally to buy.

But it certainly isn't as bad a time to buy as 06 / 07

Mr. Loverman

mathie wrote: »

Nobody has a crystal ball.

I really don't like this argument, because it is beyond obvious Ireland will have higher taxes and more emigration, hence less money for houses, hence falling prices. All those construction jobs aren't returning, no matter how much we may want them to.

mathie wrote: »

Was it mad to buy in 06 / 07 when everyone was saying to buy? Yes.
Is it mad to buy in 11 when everyone is saying not to buy? Who knows?
Time will tell.

Who was saying to buy in 06/07? The banks? The politicians? The property pages in newspapers? Auctioneers? These people are still saying we should buy. If you listen to someone with a vested interest and don't take their advice with a grain of salt, well then, what can I say, at best you're naive!

Zamboni

We should all buy now if we can get the finance.
Get the biggest best house you can get your hands on.
The chances of this spineless government allowing repossessions is slim to none so you don't have to worry about what it cost, potential value or even repaying the mortgage.

Theboinkmaster

mathie wrote: »

People who are saying houses will be X down in X years time are only guessing.

Nobody has a crystal ball.

Was it mad to buy in 06 / 07 when everyone was saying to buy? Yes.
Is it mad to buy in 11 when everyone is saying not to buy? Who knows?
Time will tell.

If you can get a good deal then I'd go for it.

I speak from experience. We bought early this year.
We got 25% off the current average (and 60% off peak) in the area as the seller was desperate.
We'd a large chunk of change that was earning very little interest.

A lot of conditions will dictate if it's a good or bad time for you personally to buy.

But it certainly isn't as bad a time to buy as 06 / 07

I'm sorry but this kind of attitude & ignorance is the reason why so many people are in financial ruin.

You don't need a crystal ball to tell you prices are going to fall sharply over the next couple of years. I'm not advocating putting off buying forever however anyone buying 2007 - 2014 or so are doing so in a period with unprecedented and sharpest declines in property prices in the country's history - madness.

In 2006/7 not everybody was saying to buy - only ignorant fools or vested interests.

You got 60% off the peak? Peak prices was a bubble - completely meaningless so there's no reason to compare them. In 2016 you could be looking at 90% off peak, just like Japan.

I agree with your closing statement that it's a better time to buy than in 06/07 however that's the peak so anytime is better. I guarantee though you'll be saying the same thing in a few years - in 2015 you'll say now is a better time to buy than in 2011 etc.

I'll reirerate what i said before - anyone buying today their first home may as well burn their cash. Wait just a couple more years and save yourself thousands, maybe hundreds of thousands.

seamus

It's madness if you're buying something that you view as your first home.

The only properties anyone should be buying at the moment are properties that they don't have any future plans to sell. It's OK to think of, "In 30 years time we'll kick the kids out and buy a country cottage", but if you're thinking of, "In ten years' time, we'll need more space for the 4th child, so we'll have to trade up", then you're walking yourself into a whole world of pain.

Buy a property now that will accomodate you until you die.

mathie

Mr. Loverman wrote: »

Who was saying to buy in 06/07? The banks? The politicians? The property pages in newspapers? Auctioneers? These people are still saying we should buy. If you listen to someone with a vested interest and don't take their advice with a grain of salt, well then, what can I say, at best you're naive!

Yeah all them.
But I was mostly thinking the dog on the street was saying to buy then and not to buy now.

reprazant

catbear wrote: »

Being financially prudent is being a cretin, a bit Bertie Ahernish don't ya think?
Personal wealth is not just how you house yourself.

I think she meant certain, not calling somebody a cretin.

mathie

Theboinkmaster wrote: »

I'm sorry but this kind of attitude & ignorance is the reason why so many people are in financial ruin.

How is it ignorant to think that people can't oredict the future?
"Past perfermance is no indication of future performance"

Theboinkmaster wrote: »

You don't need a crystal ball to tell you prices are going to fall sharply over the next couple of years. I'm not advocating putting off buying forever however anyone buying 2007 - 2014 or so are doing so in a period with unprecedented and sharpest declines in property prices in the country's history - madness.

So if someone got 90% off peak now would it be sensible to buy?

As I said numerous factors should influence the decision.
Amount of deposit, your age, if it's a home for life as seamus said.

Theboinkmaster wrote: »

In 2006/7 not everybody was saying to buy - only ignorant fools or vested interests.

Not everyone but the majority were.
Very few dissenting voices at the time.
We needed a lot more.

Theboinkmaster wrote: »

You got 60% off the peak? Peak prices was a bubble - completely meaningless so there's no reason to compare them. In 2016 you could be looking at 90% off peak, just like Japan.

I understand the bubble needs to be ignored in that respect.
I did my math on what house prices should have been over that period in the area we bought and what it should have been earlier this year and we paid a price in line with inflation.

Theboinkmaster wrote: »

I agree with your closing statement that it's a better time to buy than in 06/07 however that's the peak so anytime is better. I guarantee though you'll be saying the same thing in a few years - in 2015 you'll say now is a better time to buy than in 2011 etc.

Yeah I think that house prices will be lower in 2015 than they are now.
That would be my feeling but I couldn't say that for fact.

I made a judgement call to lock in a good LTV rate because of my large deposit.

Theboinkmaster wrote: »

I'll reirerate what i said before - anyone buying today their first home may as well burn their cash. Wait just a couple more years and save yourself thousands, maybe hundreds of thousands.

First home?
To get on the ladder?

no1beemerfan

Personally I would give my left leg to have my own place but keeping emotions out of it I see its not worth buying at the moment, especially as we have a few tough years to get through first. I got married in July and we agreed to rent for the next 5 years and see then. We got lucky in that we have a two bed detached house with a big garden for €450 a month to rent.