Is it madness to buy our first home now??

Lyn256

cgarrad wrote: »

Zimbabwe offers 5% ;-)

I'll pass on that-Thanks!!!

cgarrad

3.90% any good, think its the best on offer...

http://www.nationwideuk.ie/savings/12monthfixedrateaccount.asp

CiaranC

cgarrad wrote: »

I really hope no one was stupid enough to buy recently...

WSJ:

http://online.wsj.com/article/SB10001424053111903791504576585954218749690.html

A lot worse to come....

Couple on this thread bought recently. Hope they wont be joining the clamour for the government to bail them out in a year or two

cgarrad

I have no time for people that can not stand by their actions but there was fear of missing out in 2006-7.

Anybody that bought after Lehman should be held 100% accountable.

Anybody that bought in the last 6 months is in for a lot of pain ;-)

The realization that you are now in the same mess the rest are while knowing that everybody else told you not to is going to make them feel very stupid.

I'd hate to be paying out every single month for 25 years just because I could not wait 2 years.

Those Daft.ie numbers going forward are going to equal the equivalent of a holiday of a lifetime every 3 months....

magneticimpulse

CiaranC wrote: »

Couple on this thread bought recently. Hope they wont be joining the clamour for the government to bail them out in a year or two

totally agree...same people who will be phoning up joe duffy crying because they cant repay their mortgage etc.

There is one thing that the banks gave silly loans...its another that people dont take the responsibility for their own actions instead of the rest of us having to take the force of their reckless spending.

froger

magneticimpulse wrote: »

totally agree...same people who will be phoning up joe duffy crying because they cant repay their mortgage etc.

There is one thing that the banks gave silly loans...its another that people dont take the responsibility for their own actions instead of the rest of us having to take the force of their reckless spending.

Being a renter for the last 5-6 years bailing out people who cant afford their mortgages would be the last straw in forcing me out onto the street and protesting, than banks were bad enough.

beeno67

froger wrote: »

Being a renter for the last 5-6 years bailing out people who cant afford their mortgages would be the last straw in forcing me out onto the street and protesting, than banks were bad enough.

You are already bailing them out. If they cannot repay & the house is repossessed the loss is taken by the banks and you basically pay the rest of the outstanding balance by refinancing the banks. The former mortgagee then has to be housed somewhere and you may end up paying for that also. This doesn't include any legal actions or costs of eviction that you are also paying for.

DeVore

I asked this of the forum last year and got similar replies. I bought 11 months ago and I just searched through daft at the price I paid and nothing there is making me regret it.

Could property fall further? Yes, of course it could.

Does anyone have a crystal ball? No.


Here's my advice: don't take anyone's advice.

Due to my circumstances I'm paying LESS than my old rent, living in a far nicer place so my quality of life has gone up while costs have dropped, but that's me. You have your own situation to consider.

Oh and yes, if anyone suggested I deserve a "bail out", I'd laugh at them. I don't. I shouldn't get one either.
Mind you the way the gov is throwing around our cash to unsecured unguaranteed bond holders, it's every man for himself now I feel.

DeV.

ravendude

cgarrad wrote: »

3.90% any good, think its the best on offer...

http://www.nationwideuk.ie/savings/12monthfixedrateaccount.asp

EBS giving 4.25% AER currently on 12 month fixed. Think this is about the best at the moment.

Usually (at least prior to the takeover) you could get them to ring head office and get a slightly better rate even than that advertised.

http://www.ebs.ie/site/all/Fixed%20Save%20Rates?opendocument

ravendude

Squall19 wrote: »

Some savings accounts are offering up to 5% even after dirt you would be left with up to 5k a year in interest.

450 euro a month would cover most of the rent on a decent house, so why buy?

I don't believe this is the case. You may be looking at gross interest rates over 18 months or something.

You need to use only the AER to compare (usually underneath with an asterisk *) , - all the other rates they display are nonsense as they can use any method of calculation over any term.

Rookster

Morgan Kelly reckons that property prices will drop by 70% from the height of the boom. They have only fallen 50% so far. Wait!

Spiritofthekop

DeVore wrote: »

I asked this of the forum last year and got similar replies. I bought 11 months ago and I just searched through daft at the price I paid and nothing there is making me regret it.

Could property fall further? Yes, of course it could.

Does anyone have a crystal ball? No.


Here's my advice: don't take anyone's advice.

Due to my circumstances I'm paying LESS than my old rent, living in a far nicer place so my quality of life has gone up while costs have dropped, but that's me. You have your own situation to consider.

Oh and yes, if anyone suggested I deserve a "bail out", I'd laugh at them. I don't. I shouldn't get one either.
Mind you the way the gov is throwing around our cash to unsecured unguaranteed bond holders, it's every man for himself now I feel.

DeV.

Daft.ie is ridiculous...ive been looking on there for the last 2 years & its mostly ALL the same houses for sale two years later, they are not selling at bubble prices people are still looking for.

this link will give you a good indication of how things are looking nowadays...



http://www.auction.co.uk/irish/ResultsLive.asp

Spiritofthekop

Rookster wrote: »

Morgan Kelly reckons that property prices will drop by 70% from the height of the boom. They have only fallen 50% so far. Wait!

And maybe even more.

this is a good indication of how things are looking...they will drop even further from these auctioned houses over the next 5 - 10 years

http://www.auction.co.uk/irish/ResultsLive.asp

Theboinkmaster

DeVore wrote: »

I asked this of the forum last year and got similar replies. I bought 11 months ago and I just searched through daft at the price I paid and nothing there is making me regret it.

Could property fall further? Yes, of course it could.

Does anyone have a crystal ball? No.


Here's my advice: don't take anyone's advice.

Due to my circumstances I'm paying LESS than my old rent, living in a far nicer place so my quality of life has gone up while costs have dropped, but that's me. You have your own situation to consider.

Oh and yes, if anyone suggested I deserve a "bail out", I'd laugh at them. I don't. I shouldn't get one either.
Mind you the way the gov is throwing around our cash to unsecured unguaranteed bond holders, it's every man for himself now I feel.

DeV.

I'm sorry DeV but you are wrong. First of all browsing ASKING prices on daft and comparing to what you paid is completely pointless as is no indication of the value of said asset at all. I could offer you my BIC pen for sale and ASK €5k for it - doesn't mean ill find a buyer or it's worth anything near that.

Also you say could property fall further. NO it WILL fall further and nothing can stop it's current freefall - see my earlier post with 26 reasons why. Give me one reason to contradict any of these.

Also you're paying LESS than old rent? Well done - not exactly a herculian feat given historically low interest rates & worldwide recssion. What about if ECB rate increased by 4to 6%?

Does anyone have a crystall ball? That nonsense was spouted during the boom years - plenty of people saw the crash coming based on OBJECTIVE reports from IMF etc and basic economics.

Don't take anyone's advice? Repeat that to the thousands in negative equity who shot down us "doommongers" and "naysayers" during the boom.

Getting into a lifetime of debt requires you to research and listen to all opinions (especially non vested and objectives ones) and then reaching an INFORMED decision.

iguana

Theboinkmaster wrote: »

Also you say could property fall further. NO it WILL fall further and nothing can stop it's current freefall - see my earlier post with 26 reasons why. Give me one reason to contradict any of these.

I agree with you overall, but point (k) on your list (ECB raising interest rates to normal levels once Europe crises recovers, ie by 1%-3%) assumes that the Euro will recover from it's current crisis. It mightn't.

Diarmuid

iguana wrote: »

I agree with you overall, but point (k) on your list (ECB raising interest rates to normal levels once Europe crises recovers, ie by 1%-3%) assumes that the Euro will recover from it's current crisis. It mightn't.

well you'll have much bigger things to worry about in that scenario

iguana

Diarmuid wrote: »

well you'll have much bigger things to worry about in that scenario

I know, but it is unfortunately a possibility at the moment which is worth bearing in mind when trying to plan for the future.

Mr. Loverman

Yes, it's quite amazing that many home buyers don't realise interest rates are at a historic low which means saying "my mortgage is cheaper than my rent!" is so short sighted when you consider how long a mortgage is.

But people will say anything to make themselves feel better. It's just unfortunate they try to pass this off as advice.

DeVore

I'm locked in for 3 years. I didn't but during the boom years because I was the one saying it would crash. I'm comparing asking prices to the asking price for the house I did buy... For which I didn't pay the asking price . So the comparison is as reasonably valid as can be made with the data to hand...

DeV.

radharc

Well after starting the whole thing I suppose I better come back with an update!

I've read everything on here and taken it in and I know a lot of ye are going to pull your hair out but we have agreed a price for the house and have been mortgage approved and fully intend to go ahead with the purchase.

I don't doubt that the house will be worth less in 2/3 years time than we have paid for it but thats something that we've got no problem with - it is the house we want and we're at the stage in our lives where we really want to buy it. It is going to be our house for the rest of our lives and we know we aren't buying at the bottom of the market (or even near the bottom) but it is affordable for us and we're going to go with it.

We're probably a bit unusual in that the 2 companies we work for are flying at the minute and TBH our job prospects are good even with the recession. The house itself is a nice 4 bedroom on 2 acres in a nice area in rural Ireland so mightn't be subject to as dramatic a fall in value as some other properties.

To sum up, we are fully aware the house will fall in value but it's a price we're willing to pay.

daltonmd

Mr. Loverman wrote: »

The point of this thread is that it is currently not economically advantageous to buy now. No one is saying the concept of owning property is wrong.

This is one of the most pertinent statements in this thread - actually in the whole for and against buying argument at the moment.

@The OP. Have you done the following:

1) Stress tested your mortgage to 3% above what it is now? (This allows for 3 things, a raise in interest rates/less disposal income via higher taxes etc/higher cost of living - either/all of these will effect your disposable income thus affecting your ability to repay the mortgage somewhat).
2) Taken into account that pre-bubble the average first time buyer couple stayed in their first home for 7 years.
3) Have you allowed for one job loss/sickness? Could you comfortably repay your mortgage on one income?
4)The cost of having children down the road?

---

During the 90's when people bought homes, they bought at low prices with average earnings but the difference was that they were coming out the other side of a very rough period in this country.

The economy was growing, unemployment was falling, earnings were rising, taxes were falling, interest rates falling, house prices rising. Essentially meaning that as property prices and earnings rose the cost of financing the mortgages fell.

Now we are heading into a very dark period again - for at least five years - and it's not just Ireland it's the global economy.

I am sure that there are many young couples such as yourselves who thought they had safe secure jobs. I am sure there are many who echoed the same sentiments as you when they made such a big decision.

They too could afford to buy, they too had "secure" jobs, they too thought that their homes were "different".

4 years ago I was going to buy a property, I had a "secure" job and earned 70k plus a year. The house I was interested was asking 400k and the mortgage I was approved was 330k. At that time I had a "minor" physical medical condition. I asked my doctor what the worse case scenario was and she told me that it "could" result" in surgery which could put me out of work for 6 months.

I sat down and did my sums and even with an income continuance plan, my income would be down 50%. I decided not to go ahead - never dreaming that my worse case scenario would come to pass.

Here I am 4 years and 2 surgeries later. Had I bought then my repayments on my mortgage would be at least 1800 per month and the house is now"asking" 175k. The worst case scenario had a worse case scenario in that there were complications and I am now one year out of work and it will be another before I am even considered fit again - if ever.

My point is that you really need to look at the worst case scenario, Mr. Loverman posted a comprehensive A - Z on the actual state of this economy and the tough road that we have ahead.

You are entering into a very important transaction, the most expensive one in your life and yet your reasons are really more suited to buying a car.

Take any of these scenarios:

You knowingly buy this house that is falling in value and you or/and your wife lose your jobs - what then?

You knowingly buy this house and fix for 5 years and are hit with a 2 or 3% interest rate while your income has reduced (which it will either through taxes or higher cost of living or pay cuts). Leaving you with less disposable income to service higher mortgage costs. What then?

You knowingly buy this house and start a family and it's twins - meaning that maybe your wife cannot return to work because of high creche fees? What then?

You knowingly buy this house, start a family and your child has a medical condition or your wife develops Postnatal depression and cannot return to work? What then? * Obviously I hope that this doesn't happen*.

There are 1000's of people in this country who bought after the boom, they too didn't care about the price they paid but as I have outlined above, paying over the odds for a house is not the only issue - it's ignoring what is happening now which will definitely impact on your ability to repay your mortgage in the future. It's ignoring the financial and social cost, that is the flaw in how you came to your decision.

Now you might say that if interest rates rise and if you take a pay cut then you can still manage the mortgage - which may be true but at what cost to your standard of living?



Take this example:

Say your house is 250k and you borrow 230k and fix for 5 years. Your repayments are 1300pm.

In 2/3 years say the house is down to 200k and you borrow 180k your repayments even at 7% will be 1200pm.

An extra 100 euro per month is a good night out with your wife, it's a 100 euro less that you can put by for your child/rens education. It's a holiday in the sun each year.

Would you take a 100 Euro note every month and burn it? You probably have to earn 200 Euro to have 100 Euro in your pocket - how many days/hours do you have to work to earn that? One day a week is 4 days a month is 48 days a year - almost 2 months year - would you work 2 months for free?

While it is your choice your decision impacts on the economy - the more people that buy now are placing the future economy at greater risk. The more money paid to the banks the less that goes into the local economies and this has an effect on the wider economy.

The more people who buy now and who fall foul of the above scenarios will put more pressure on our social welfare system, meaning higher taxes for the rest of us.


Sit down and honestly ask yourself if you could survive using any one of the scenarios that I laid out above and then make your decision. Don't think that your job is 100% safe - look at Talk Talk in Waterford - a highly profitable company moving out of this country - not the first and certainly not the last.

Whatever your decision I genuinely wish you well.

Rgds

Daltonmd

Rookster

Is this thread still going. This is a "NO Brainer". If prices are falling month on month why would you buy?

Spiritofthekop

Rookster wrote: »

Is this thread still going. This is a "NO Brainer". If prices are falling month on month why would you buy?

"IF".....?

derealbadger

Rookster wrote: »

Is this thread still going. This is a "NO Brainer". If prices are falling month on month why would you buy?

Not for everybody i have a relative that is looking to buy at the moment and all the common sense in the world wont stop her i have given up on trying to explain the reasons to wait

Monty Burnz

derealbadger wrote: »

Not for everybody i have a relative that is looking to buy at the moment and all the common sense in the world wont stop her i have given up on trying to explain the reasons to wait

The 'NAMA for the little people' types are still buying. Alison O'Riordan, how are ya? :rolleyes:

Villa05

@ daltonmd - The best post I have ever read

derealbadger

Villa05 wrote: »

@ daltonmd - The best post I have ever read

+1 I must get my sister to read it still probably wont make any difference but that's up to her

daltonmd

derealbadger wrote: »

+1 I must get my sister to read it still probably wont make any difference but that's up to her

Many thanks folks. Hopefully your sister and others will at least sit down and think it through a little further.


daltonmd

Mr. Loverman

This is slightly off topic, but I am astounded by the amount of people who have told me "I never knew interest rates could change" as they panic at their growing mortgage.

If you are going to buy now, please please research what you are getting into. daltonmd's excellent post (http://www.boards.ie/vbulletin/showpost.php?p=74616179&postcount=292) should be *obvious* if you are buying a house due to the amount of research and analysis you have done. (I don't mean to take away from your excellent post daltonmd, I'm just saying all home buyers should be aware of all the risks before buying; it makes no sense to buy based on the advice from your dad and bank manager).

daithimacgroin

I might consider buying now if I didn't need a mortgage and the house had some kind of special feature, like it's own jetty on a lake or by the beach or sth.