Is it madness to buy our first home now??

noxqs

Seamus is correct and here is an extended reason why now is a bad time:

Should you need to trade up within 10-15 years, and prices are dropping chances are your negative equity is greater than the principal paid down on the mortgage at that time. Which means, your deposit is almost certainly lost and you're back to square one and possibly worse off.

The first 10 years on a mortgage will hardly make a dent in the principal. Given that house prices are almost certain to drop and stagnate for at least 10-15 years, you would have to be 110% sure that you will not be needing to move in that time or your deposit will be wiped out.

There is speculation based on evidence that we are entering a two decade bear market (San Francisco Fed: http://www.frbsf.org/publications/economics/letter/2011/el2011-26.html). This is because baby boomers are retiring and/or dying off from now to then and this will have repercussions on the markets in a negative direction.

Renting is perfectly OK - also for families. Do not get sucked into doing what everyone else is doing - everyone else seems to shoot shotguns at their feet all the time. Sit on your hands and save. Save. Save.

mathie

seamus wrote: »

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.

100% agree with this.

If we'd taken the "ladder" and the "first home" out of the equation we'd have a lot less problems these days.

People should only buy a property that they think they might never sell.

I've too many friends in apartments that they can't sell.

Rachiee

i bought my house about two years ago the value has probably gone down about 20k and my repayments have been increased about six times but ive no regrets its still relatively cheap compared to renting, I got in a good area and am here for the long haul so its just like renting from the bank but getting a tiny amount of equity in return im sure prices still have further to drop it depends on your circumstances most of the asking prices are ridiculous but you dont need to pay the asking price in fact you'd be mad to there are some bargains out there right area, right size, right price why not.

ntlbell

when you say it's cheaper than renting can you give us some idea how you're working the figure out?

so for the same place.

interest on a mortgage, life insurance the mortgage repayment etc upkeep of the home etc

how does it fair exactly against renting the same place?

seamus

ntlbell wrote: »

when you say it's cheaper than renting can you give us some idea how you're working the figure out?

so for the same place.

interest on a mortgage, life insurance the mortgage repayment etc upkeep of the home etc

I think this is something that people don't consider properly.

They see that a mortgage is €50/month cheaper than renting and assume it's the better deal.

But when you rent, you don't need to worry about general maintenance (boiler servicing, painting, varnishing, carpetting, etc etc etc), buildings insurance, management fees and whole pile of other little costs that crop up now and again. If you take a place fully furnished, you also never have to worry about the cost of servicing or replacing your appliances.

If you were to take the five-year costs of owning a property (where you'll have to repaint once, probably and replace a few appliances) and split it down into a per-month cost, you might find that it roughly breaks even with renting, but more than likely it will actually cost a little more.

antiskeptic

radharc wrote: »

I'm eager to hear opinions...

The house I bought '99 had seen a quadrupling in price since '95. I don't see any reason to place the start of the bubble anywhere else than at the place where price rises took on bubble-like characteristics.

If the Prophet O'Kelly (pbuh) is correct in his view that our bubble will play out as all housing bubble-bursts have done in the past, then the bottom of the market (after any undershooting has been worked through) will see my house priced at about 100 euro (in present day terms). A local estate agent proposed only 2 months ago that it be placed on the market at 240k - down from just over a half a mill at peak.


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The slope of house price decline is steeply downwards at present. There is no sign that the graph is pulling out of it's dive. Whenever it does start pulling out of that dive, it'll take 3-4 years before it actually reaches any post-undershooting bottom. That was the story on the 'going-up' side of the graph at any rate.

From the current ca. 13% reduction p.a. to 0% reduction in a year or two sounds implausible.

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It will be interesting to see what happens to rent allowance in the coming budget. A lowering of rental allowance will feed through to a lowering of rental prices across the board (is the argument).


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Unless you are buying a house for an Allsop-like figure (i.e. 70% off peak) that will insulate you to an extent from further significant drops, I can't see how you would be anything other than stung on a house purchase today.

There are significant joys and freedoms in owning your own home - I can remember my turning my back on a rental existence with a sigh of relief. Those joys would likely to be tempered if their cost proved astronomically disproportionate

Zamboni

DrPhilG wrote: »

This is where we are at. We are trying to buy a house but I would only recommed it if this is your ideal house and you intend to stay for the rest of your days.

If I buy this house (€135k) I don't care if it drops another 50% because it will be our home for life.

Otherwise I'd hold off for a while and save your ass off in the meantime.

I don't mean to be disrespectful but does every thread on this forum have to feature your story?

DrPhilG

Zamboni wrote: »

I don't mean to be disrespectful but does every thread on this forum have to feature your story?

Wow, that's a bit harsh...

The OP asked for advice relevent to his/her situation, I gave advice based on my own situation. There are a hell of a lot of helpful posters on this site and some not so helpful. I thought it would be a good thing to give some advice for a change as I am in a similar spot as the OP.

Apologies if it has offended you, I'll delete my posts and bow out.

zuutroy

We decided to take the plunge and have gone sale agreed. I'm 32 and we've a kid on the way in December and I'm just sick of living in someone else's house at this stage. We're buying a decent sized house that has room to extend if necessary in an area that I know I'm gonna be happy to spend my life in.
I get a place to actually call home, with furniture I want in it, my choice of paint on the walls and grotesque American fridge freezer in the kitchen as a statuesque testament to the Celtic Tiger days gone by. House cost me 240k. Mortgage for the first few years is 400 p/m lower than renting a 3-bed semi in the same area and <1/5 of our combined income. I don't care if the house is worth e2.99 in 10 years time once I can afford to live in it.

Theboinkmaster

zuutroy wrote: »

We decided to take the plunge and have gone sale agreed. I'm 32 and we've a kid on the way in December and I'm just sick of living in someone else's house at this stage. We're buying a decent sized house that has room to extend if necessary in an area that I know I'm gonna be happy to spend my life in.
I get a place to actually call home, with furniture I want in it, my choice of paint on the walls and grotesque American fridge freezer in the kitchen as a statuesque testament to the Celtic Tiger days gone by. House cost me 240k. Mortgage for the first few years is 400 p/m lower than renting a 3-bed semi in the same area and <1/5 of our combined income. I don't care if the house is worth e2.99 in 10 years time once I can afford to live in it.

Would you care if the house could be bought for €200k next year?

Squall19

Theboinkmaster wrote: »

Would you care if the house could be bought for €200k next year?

Himself and his missus are taking home a combined 80k+ a year, I would be pretty laid back as well if I was in his position.

Saying that a couple who work in the same place as me are on a little less 70k combined, which is a very good wage these days and bought a 220k house 3 years ago and didn't plan on kids for a years, but faith had a different idea and she has struggled to stay at work long term since then.

Kids change things, women that were motivated and driven can go either way, not there fault its just how it is.I will take a mortgage after my kids are 3 or 4 years old just to see how my missus is doing, if she can go back to work fair play I will be delighted but if she can't we will have to budget that in.

I dont have kids but they say that unless the women has a pretty good job eg 35k plus a year it doesn't make huge sense financially to return to work if you have 2 young kids or more, especially in cities Dublin.

Dont know if there is much truth in that?

Would like to hear from anyone in that position?

Snakeblood

Squall19 wrote: »

I dont have kids but they say that unless the women has a pretty good job eg 35k plus a year it doesn't make huge sense financially to return to work if you have 2 young kids or more, especially in cities Dublin.

Dont know if there is much truth in that?

Would like to hear from anyone in that position?

I have a 1 year old, it costs a grand for the creche, and when you factor in the running of a second car, getting a work wardrobe, and missing your kid for 8 hours a day, my wife thought long and hard about going back to work. She did in the end, but it's not a no brainer. We have less time with our daughter, less time to clean the house, stuff like that. She's on about 30 and it's not fantastic.

Squall19

no1beemerfan wrote: »

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.

In the same both myself, paying similar rent and both saving hard to buy in about 4-5 years.We should have more than half the house price in savings by then as long as we don't lose our jobs.

Owner of our house is working in Canada and his mortgage bill from the bank and a few other letters come here, so I opened the mortgage one to see how much it's costing him.

1188 euro a month is what its costing him which is only going to go up, I pay him 500 for rent and house is now worth 160k max, he probably payed well over 200k, maybe even close to 300k 7 years ago when he bought it.

Its better to rent I think.

dumbyearbook

Squall19 wrote: »

In the same both myself, paying similar rent and both saving hard to buy in about 4-5 years.We should have more than half the house price in savings by then as long as we don't lose our jobs.

Owner of our house is working in Canada and his mortgage bill from the bank and a few other letters come here, so I opened the mortgage one to see how much it's costing him.

1188 euro a month is what its costing him which is only going to go up, I pay him 500 for rent and house is now worth 160k max, he probably payed well over 200k, maybe even close to 300k 7 years ago when he bought it.

Its better to rent I think.

If you opened a letter of mine from the bank as a tenant i'd throw you out.:eek: seriously respect the persons privacy.

Squall19

Snakeblood wrote: »

I have a 1 year old, it costs a grand for the creche, and when you factor in the running of a second car, getting a work wardrobe, and missing your kid for 8 hours a day, my wife thought long and hard about going back to work. She did in the end, but it's not a no brainer. We have less time with our daughter, less time to clean the house, stuff like that. She's on about 30 and it's not fantastic.

Thanks for that snake very insightful, my fiancee is on a little less with 27k, no car though as we live near her work, we will have that decision as well in the future, she works in a demanding job and I cant see her being able for it.

Change in the law with children starting in school doesn't help either.

Squall19

dumbyearbook wrote: »

If you opened a letter of mine from the bank as a tenant i'd throw you out.

I shouldn't have but I was curious

Snakeblood

Squall19 wrote: »

Thanks for that snake very insightful, my fiancee is on a little less with 27k, no car though as we live near her work, we will have that decision as well in the future, she works in a demanding job and I cant see her being able for it.

Change in the law with children starting in school doesn't help either.

Oh,the other problem is once your kid starts in school, your partner is ****ed for stuff to do for 6 hours for the day, I think that's what swung it in the end, my wife still wanted to have a career, and you can't really just drop out of work and expect to get back in 5 years later as though nothing has changed.

foxy06

Squall19 wrote: »

Owner of our house is working in Canada and his mortgage bill from the bank and a few other letters come here, so I opened the mortgage one to see how much it's costing him.

You opened someone elses post?

On the topic of going back to work after kids I don't think its worthwhile financially unless your on serious money. Certainly wasn't worth my while going back. Would love to see something in this country to make it easier for women to go back to work after having kids. Would help a lot of single mothers that want to work but cant because of childcare costs to get jobs. I found it hard going back to work while married. Friends of mine on their own find it impossible.

dumbyearbook

zuutroy wrote: »

We decided to take the plunge and have gone sale agreed. I'm 32 and we've a kid on the way in December and I'm just sick of living in someone else's house at this stage. We're buying a decent sized house that has room to extend if necessary in an area that I know I'm gonna be happy to spend my life in.
I get a place to actually call home, with furniture I want in it, my choice of paint on the walls and grotesque American fridge freezer in the kitchen as a statuesque testament to the Celtic Tiger days gone by. House cost me 240k. Mortgage for the first few years is 400 p/m lower than renting a 3-bed semi in the same area and <1/5 of our combined income. I don't care if the house is worth e2.99 in 10 years time once I can afford to live in it.

Out of interest how much did you put down and what interest relief do you get and for how long? What kind of payments are you making?

Hunter Mahan

A lot of hysterics in this thread.

There are a lot of factors you need to consider, your financial security, what you can afford, allow for increases (although in the short term there are predicted reductions in interest rates) and the location of your desired house.

If this is a house for life, which I assume it is, then I don't see the problem. It's a buyers market and will be for the foreseeable. Take your time negotiate hard, walk away if necessary (more than likely they will come back to you) and do your research (planning, locality, inhabitants etc etc).

Houses in certain areas will keep dropping to a certain extent, especially in some of the newer estates with vacant houses etc. Others will not, mature estates, rural areas and traditional good areas, people won't put these kind of houses up for sale unless they get an attractive price relative to current economic circumstances, and they will wait for their price, years even.

As long as this is an investment in your family, you can afford the repayments with some to spare and you allow for developments in your family circumstances then go for it.

Better to be mortgage and rent free by the time you are ready to retire, takes the pressure off

Edit: zuutroy talks a lot of sense, and maybe it will be hard for you and maybe you won't see the benefits of your purchase financially, but when this cycle does full circle, future generations of your family will benefit greatly.

Hunter Mahan

zuutroy wrote: »

We decided to take the plunge and have gone sale agreed. I'm 32 and we've a kid on the way in December and I'm just sick of living in someone else's house at this stage. We're buying a decent sized house that has room to extend if necessary in an area that I know I'm gonna be happy to spend my life in.
I get a place to actually call home, with furniture I want in it, my choice of paint on the walls and grotesque American fridge freezer in the kitchen as a statuesque testament to the Celtic Tiger days gone by. House cost me 240k. Mortgage for the first few years is 400 p/m lower than renting a 3-bed semi in the same area and <1/5 of our combined income. I don't care if the house is worth e2.99 in 10 years time once I can afford to live in it.

Well said, and best of luck. Enjoy it. As you say I think, it's not an investment anymore at present, but a lifestyle choice. With a bit of luck and plenty of time then it may well become a valuable asset once more.

Mr. Loverman

Hunter Mahan, are you an estate agent?

Or did you recently buy or build?

Because your post reads like something someone with a vested interest in fooling others or fooling themselves would write.

Sorry if I sound harsh.

Hunter Mahan

Mr. Loverman wrote: »

Hunter Mahan, are you an estate agent?

Or did you recently buy or build?

Because your post reads like something someone with a vested interest in fooling others or fooling themselves would write.

Sorry if I sound harsh.

You are being harsh so why apologise?

I am not an estate agent and I don't have a mortgage, but if I was starting a family and living in Ireland permanently, I would have no problem buying at present, I know that I would look to buy in the right area, I would pay what I was happy to pay, and could afford to pay.

People on here still talk like buying a house is a financial investment with something to be gained monetarily by waiting and possibly in the future. It's not anymore, it's akin to buying a new car, not a good investment as it depreciates the minute you sit in it and it's never worth the money you paid for it. People buy new cars either because they want one or feel safer buying new rather than used.

The only good reason to buy a house now is if you want to and in the OP's case it sounds like he wants to buy a family home he can afford. Now the only benefits to him and his wife are:

That if he's lucky by the time he retires he will be mortgage/rent free.

His descendants will always have a home if they so choose.

Stability.

What's your magic formula Mr Loverman? Wait and see? How long should he wait? This crash will most likely not show any signs of recovery for 10-15 years at least.
Wait till the market bottoms out? When's that going to happen and who's going to decide? At this imaginary point won't demand increase?

The supply of house's in these ghost estates (unless they're knocked) will not diminish in my lifetime I'm guessing, because people won't take the risk, pushing demand up for mature developments or one off houses eventually.

Anyway in my opinion that's all irrelevant, the OP wants to start a family home and if he can afford it and really wants it then he should go for it....

Mr. Loverman

Hunter Mahan wrote: »

What's your magic formula Mr Loverman? Wait and see? How long should he wait? This crash will most likely not show any signs of recovery for 10-15 years at least.
Wait till the market bottoms out? When's that going to happen and who's going to decide? At this imaginary point won't demand increase?

I live in China. I will buy for cash in a few years. (Long term I will probably settle in Ireland).

I don't mind if I do not buy at the bottom of the market, but I know it makes no sense to buy now. Ireland has not recovered yet (and by "recover" I mean return to reality and accept we are a fairly insignificant island with hardly any people so things should not cost a fortune).

I have no problem with people buying now, but I do have a problem with people pretending it makes financial sense to buy now.

Hunter Mahan

Mr. Loverman wrote: »

I live in China. I will buy for cash in a few years. (Long term I will probably settle in Ireland).

I don't mind if I do not buy at the bottom of the market, but I know it makes no sense to buy now. Ireland has not recovered yet (and by "recover" I mean return to reality and accept we are a fairly insignificant island with hardly any people so things should not cost a fortune).

I have no problem with people buying now, but I do have a problem with people pretending it makes financial sense to buy now.

Where did I ever say it makes financial sense or that it was a good financial investment? I can't believe I wasted energy replying to your reactionary post when you didn't even read the thread properly.

Sorry if that sounds harsh, oh wait....

Treehouse72

Hunter Mahan wrote: »

If this is a house for life, which I assume it is, then I don't see the problem.

Here's the problem.

Spend €300,000 on a house that's worth €200,000 in 2 years. That's €100,000 in the difference, and by the time interest is included it will amount to closer on €200,000.

That is not notional or imaginary money. That is real money being given to the seller and the bank THAT YOU ARE NOT SPENDING ON: your kids' education, holidays for the family, better food, more evenings out away from the kids with your missus, replacement cars every few years, new furnishings or an extension from time to time...

I presume I don't need to go on.

It has been said a million times on this forum, but some people apparantly need it said again, so here goes: getting a good price on the house you buy HAS ABSOLUTELY NOTHING WHATSOEVER TO DO WITH SPECULATION OR PROPERTY INVESTMENT. It is merely a proxy measurement for the quality of life of your family going forward.

The "if it suits you then go for it" merchants never seem to get this incredibly simple concept.

iguana

There is also the whole, OMG, wait who knows how many years to buy while your life passes you by crap. Buying a house doesn't suddenly mean you are living while before that you are stuck in a painful purgatory.

I rent an excellent cottage second nextdoor to a river, 15 minutes by bus from Grafton St. My livingroom is 30sqm, I have a big kitchen diner overlooking a 50ftx50ft rear garden, which is not even slightly overlooked. I have two side garden and a front garden filled with trees and blackberry bushes which overlooks a big green, some other cottages and the river. The river is surrounded by green leafy walks and leads to one of Dublin's nicest parks (imo) which my dogs enjoy very much, especially as they rarely need to be put on a lead.

There is a shopping centre with a big Tesco a few minutes walk away, the nearest village has shops, my doctor and a few cafe/restaurants. I can walk to Terenure, Rathgar, Rathmines, Rathfarnham, Ranelagh or town. I rent unfurnished and have my own furniture. And according to what I know the last of these cottages sold for in late 2009, a few months before I moved here, my rent is less than half of what my mortgage would be and I would no longer have my savings.

I also have few financial responsibilities to the house. When the boiler pack in, it's no my responsibility to fix it. I owned a house years ago and spent a very cold winter where my boiler broke 3 times and the last time it broke I couldn't afford to fix it for 2 weeks. So if anything is like living in purgatory it's paying over the odds for housing and having to buy a can of dry shampoo because you can't wash your hair.

beeno67

iguana wrote: »

There is also the whole, OMG, wait who knows how many years to buy while your life passes you by crap. Buying a house doesn't suddenly mean you are living while before that you are stuck in a painful purgatory.

I rent an excellent cottage second nextdoor to a river, 15 minutes by bus from Grafton St. My livingroom is 30sqm, I have a big kitchen diner overlooking a 50ftx50ft rear garden, which is not even slightly overlooked. I have two side garden and a front garden filled with trees and blackberry bushes which overlooks a big green, some other cottages and the river. The river is surrounded by green leafy walks and leads to one of Dublin's nicest parks (imo) which my dogs enjoy very much, especially as they rarely need to be put on a lead.

There is a shopping centre with a big Tesco a few minutes walk away, the nearest village has shops, my doctor and a few cafe/restaurants. I can walk to Terenure, Rathgar, Rathmines, Rathfarnham, Ranelagh or town. I rent unfurnished and have my own furniture. And according to what I know the last of these cottages sold for in late 2009, a few months before I moved here, my rent is less than half of what my mortgage would be and I would no longer have my savings.

I also have few financial responsibilities to the house. When the boiler pack in, it's no my responsibility to fix it. I owned a house years ago and spent a very cold winter where my boiler broke 3 times and the last time it broke I couldn't afford to fix it for 2 weeks. So if anything is like living in purgatory it's paying over the odds for housing and having to buy a can of dry shampoo because you can't wash your hair.

Be a bit of pain if your landlord decides not to renew the lease

Hunter Mahan

Treehouse72 wrote: »

Here's the problem.

Spend €300,000 on a house that's worth €200,000 in 2 years. That's €100,000 in the difference, and by the time interest is included it will amount to closer on €200,000.

That is not notional or imaginary money. That is real money being given to the seller and the bank THAT YOU ARE NOT SPENDING ON: your kids' education, holidays for the family, better food, more evenings out away from the kids with your missus, replacement cars every few years, new furnishings or an extension from time to time...

I presume I don't need to go on.

It has been said a million times on this forum, but some people apparantly need it said again, so here goes: getting a good price on the house you buy HAS ABSOLUTELY NOTHING WHATSOEVER TO DO WITH SPECULATION OR PROPERTY INVESTMENT. It is merely a proxy measurement for the quality of life of your family going forward.

The "if it suits you then go for it" merchants never seem to get this incredibly simple concept.

What a ridiculous statement: "spend 300k and its worth 200k in 2 years time" as if it was fact. Similar to the statements during the boom "if I don't buy now house prices will keep rising indefinately"

Admittedly a purchaser has be extremely careful where he buys and how much he pays, but you would have to assume that the OP can afford the house he wants and to provide for his family.

What the scaremongers on this thread seem to have chosen to ignore is the OP's apparent desire to set up a family home, and what value would you put on that?

If he can afford it why not buy, according to you he shouldn't because it may drop further in value monetarily. I say that only the OP can decide whether the benefits he will derive from his lifestyle choice will outweigh any monetary shortfalls.

It's simple for me, if he wants it and can afford it then have it. It bafflles me how people still view property as some sort of market they can read and get right, at the minute people with money can buy houses like they would a new car.

investment

I see a 4 bed house near a college for around 60,000, should I buy as an investment as I wont be living there? first time buyer too?