Is it madness to buy our first home now??

Snakeblood

donalg1 wrote: »

Yeah fair enough prices will probably be lower next year but that still isnt a reason not to buy. If you want to buy a house at its lowest possible price then sure you can wait a year or two and watch it to see if the price drops, but how will you know when it hits the bottom? And as i said if its a house you like and want to buy and you can afford the mortgage then by waiting you are risking losing out on that house or ending up in a bidding war with someone else therefore paying more than you would pay today. And given that it is most definitely a buyers market today nobody will actually pay the asking price so you will still be getting a house at a good price. Waiting a year may only lower the asking price but the actual sale price could be the same as the seller may have an acceptable figure in their head already which wont have changed by next year.

If you were to apply the logic of not buying something now because it will most likely be cheaper next year you would never buy anything.

It's not anything. It's a house. Houses that in Dublin are going for let's say 250 grand. That's a number that gets lost on people, but it's a quarter of a million euro. That's a huge amount of money. So yes. Be a lot more careful buying that and more circumspect because it's a quarter of a million euro. It's five times fiftythousand euro. It's more than 8 times the average industrial wage. Roll the amount that you are spending around in your head, and then calculate that if you had bought that 250 thousand worth of house five years ago, it would have bought half a one bed apartment for Alison O'Riordan. If you bought in 2008, it would have bought a full one bed apartment in Drumcondra. If you buy now it would buy an okish three bed house in a not great part of town. If you buy next year: It's still a quarter of a million euro and shouldn't be thrown about because you'd buy everytime.

Zamboni

beeno67 wrote: »

Now clearly, there is a limited number of these type of properties and a still rising population. If everyone want that type of property or some version of it then they will not fall in price anywhere close to apartments, ghost estates etc. So people saying average prices will fall 30% so your house will fall 30% are not necessarily looking at the full picture.

The bracket of people that will be able to buy the type of property that you describe is also diminishing though.
Unemployment is not abating and banks are not issuing out mortgages.
So if the people lucky enough to still be in employment cannot avail of mortgages from a bank this will leave an even smaller bracket of high deposit/cash buyers being the only people in a position to even consider purchasing the properties you have described.

Ratzo Rizzo

Mr. Loverman wrote: »

Yeah, being mortgage free does change things quite a bit alright!

I know a lad who after all the warnings about the bubble bursting etc. went and got a 40 year mortgage on a property worth about 1/3 what he paid for it. He now wants debt forgiveness. Madness.

I guess I should have mentioned that in my original post but in these difficult times I don't want to come across as being smug or anything however, all the warnings about a crash were ignored as the stampede for property held its relentless grip on the general Irish public during the boom times.

Personally I blame the government for doing absolutely nothing about the spiralling cost of a 'home'. They should be put on trial for letting down so many people so very badly, they completely mismanaged the economy and now have the nerve to say they 'didn't see it coming' about the present crisis.

Anyway, that's for another discussion. One thing that is clear about home buying in the current climate is the choice available. It really is a buyers market so if you think you're getting a good deal on a home that ticks all the boxes then the vagaries of the market are of secondary importance.

cgarrad

Ratzo Rizzo wrote: »

Personally I blame the government for doing absolutely nothing about the spiralling cost of a 'home'. They should be put on trial for letting down so many people so very badly, they completely mismanaged the economy and now have the nerve to say they 'didn't see it coming' about the present crisis.

By that logic your saying that a ban on house buying should be in force now as prices are expected to go down????

Ratzo Rizzo

cgarrad wrote: »

By that logic your saying that a ban on house buying should be in force now as prices are expected to go down????

Explain how you managed to work that one out from my comments???????

amacachi

Ratzo Rizzo wrote: »

I made a conscious decision not to buy during the boom times. However, I've just recently bought a house. I managed to negotiate 25% off the asking price, which in effect, if property values continue to decline at the current rate then theoretically I have bought the house at 2013 value.

Well, the 2013 asking price anyway.

Ratzo Rizzo

amacachi wrote: »

Well, the 2013 asking price anyway.

Keyword in my comment was "theoretically"

fricatus

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.

Congratulations! I hope you'll be happy and live long there.

CiaranC wrote: »

Well done, youve just thrown away a huge amount of money you could have invested in your childs quality of life and future, and for what? So you can paint the walls and rent money off a bank instead of renting a house off a landlord.

The delusion hasnt gone anywhere folks.

What a nasty, petty little comment!

To listen to some people here, you'd swear they were going to live forever... I took the plunge when I was 32 and I'm delighted I did, even though I overpaid somewhat. I didn't want to be facing into renting during my late 30s and 40s and having to move out because the landlord wanted his house back. And I didn't want to be squeezed into only being able to get a 15- or 20-year mortgage, which is what happens as you get older.

I'm in negative equity, but so what? I can still easily afford the place, and at the rate I'm paying, I'll own it outright in 21 years' time while the rest of ye are still renting!

Zuutroy is paying less than the rent would be on an equivalent house and less than 20% of the family income. There's plenty left over for the children's education! I fail to see how that's a bad deal! Sure, he/she could wait around for the bottom of the market but not everyone has that luxury!

Theboinkmaster

fricatus wrote: »

And I didn't want to be squeezed into only being able to get a 15- or 20-year mortgage, which is what happens as you get older.

I'm in negative equity, but so what? I can still easily afford the place, and at the rate I'm paying, I'll own it outright in 21 years' time while the rest of ye are still renting!

What exactly is wrong with 15-20 year mortgages are you adverse to lower interest payments to the bank?!

2011 - have €50k in savings, house wanted is €500k, need 25year mortgage for €450k at 5%

2016 - have €200k in savings, house wanted is €300k, need 20year mortgage for €100k at 8%

:pac:

fricatus

Theboinkmaster wrote: »

What exactly is wrong with 15-20 year mortgages are you adverse to lower interest payments to the bank?!

2011 - have €50k in savings, house wanted is €500k, need 25year mortgage for €450k at 5%

2016 - have €200k in savings, house wanted is €300k, need 20year mortgage for €100k at 8%

:pac:

Are you mad? Who the hell can save €30k a year?

You're dead right of course about lower interest payments, but getting a longer mortgage early in life is the best option because the amount you're obliged to repay each month is lower.

As long as you're not on a fixed rate, the bank will then allow you to overpay on the mortgage or pay off lump sums whenever you come into a couple of grand. In the end, you'll probably pay the mortgage off within 15 or 20 years, but if circumstances makes things tight, you can reduce your payments without penalty.

I took out a 37 year mortgage, but I started overpaying within the first year, with the result that I'm now on target to pay it off in under 25 years (indeed quicker than that, as soon as I start seeing pay rises again).

donalg1

Theboinkmaster wrote: »

What exactly is wrong with 15-20 year mortgages are you adverse to lower interest payments to the bank?!

2011 - have €50k in savings, house wanted is €500k, need 25year mortgage for €450k at 5%

2016 - have €200k in savings, house wanted is €300k, need 20year mortgage for €100k at 8%

:pac:

I think now if you are in a position to save €575 per week you dont really need to be worrying about whens the best time to buy a house. Sure in a week and a half you would have the monthly mortgage paid and then you have the other two and a half weeks wages to either save, spend or throw onto the mortgage aswell

Mr. Loverman

fricatus wrote: »

I'll own it outright in 21 years' time while the rest of ye are still renting!

Yes but if the renters invest the extra money they have saved by not owning, they will have a few hundred thousand euros in the bank.

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.

donalg1

Mr. Loverman wrote: »

Yes but if the renters invest the extra money they have saved by not owning, they will have a few hundred thousand euros in the bank.

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.

But when the mortgage is clear the owner will have an asset worth a couple of hundred grand also.

I dont see how its not an economically advantageuos time to buy, house prices are low at the moment, (granted they will most likely decrease some more), interest rates aren't sky high yet, TRS can still be availed of for now, and its a buyers market so there are plenty of pro's to buying at the moment

Learpholl

donalg1 wrote: »

TRS can still be availed of for now

Does anyone know what the latest with this is? Is it still due to end on the 31st of December this year?

donalg1

Learpholl wrote: »

Does anyone know what the latest with this is? Is it still due to end on the 31st of December this year?

Last i heard it was anyway, well you get the full amount until the end of this year i.e. 25% for the first two years then 20% for next 3yrs and then 15% for the last 2yrs.

From the 1st January 2012 you will still get TRS but of 15% for seven years.

After the 31/12/2012 there will be no more TRS at all

Learpholl

donalg1 wrote: »

Last i heard it was anyway, well you get the full amount until the end of this year i.e. 25% for the first two years then 20% for next 3yrs and then 15% for the last 2yrs.

From the 1st January 2012 you will still get TRS but of 15% for seven years.

After the 31/12/2012 there will be no more TRS at all

Thanks. I had thought that it was proposed that from the 1st of January 2012, there will be no more TRS, not that it would just be reduced to 15% for the full 7 years.

deadduck

found this on revenue.ie:

Mortgages taken out from 1st January 2004 to 31st December 2011, subject to qualifying mortgage criteria, are eligible for mortgage interest relief until 31st December 2017.

Mortgages taken out from 1st January 2012 to 31st December 2012 will be entitled to mortgage interest relief at the reduced rates of 15% for first time buyers and 10% for non first time buyers, on the first €3,000 interest paid per individual.

Mortgages taken out after 31st December 2012 will not qualify for mortgage interest relief.

Mortgages taken out prior to 1st January 2004 are no longer eligible for mortgage interest relief. However, top up loans/equity release loans taken out since 1st January 2004 on these pre-2004 loans may be eligible for mortgage interest relief, provided they adhere to eligibility criteria as listed above.

Snakeblood

donalg1 wrote: »

But when the mortgage is clear the owner will have an asset worth a couple of hundred grand also.

I dont see how its not an economically advantageuos time to buy, house prices are low at the moment,

But low compared to what? Over the last 30 years, taking a normal inflation into acount, they're massively overpriced. They may be low compared to five years ago, but over an average, they're not.

desertcircus

How is it not a good time to buy? Seriously?

At the moment, house prices are dropping faster than monthly rent. A place that costs a thousand a month is losing more than that over the same period. If a place is a grand to rent but losing two grand a month in value, then rent. Even if you don't save a penny from your salary, spending that twelve grand will save you a further twelve in a year's time - and most likely significantly more, thanks to interest.

House today: 250k to buy, 12k a year to rent. Deposit needed: 20k. Mortgage: 230k.
House 2012: 226k to buy. Deposit needed: 18k. Mortgage: 208k.

That's just lopped two years off a 20-year mortgage and reduced the necessary deposit by two thousand quid.

And how are people convincing themselves the market might not keep sliding? There were 3,500 mortgages approved in the last quarter. There are 91,436 properties for sale on Daft. At the current rate, it'll take seven years just to clear the backlog - and that's on the insane assumption that no seller will need a new mortgage. Banks' lending criteria have become tighter; interest rates cannot go any lower and will instead rise; people now have to save for a deposit while they're swallowing pay cuts; and the class of people who usually provide the new buyers - young professionals in their twenties and thirties - are getting the hell out of the country as fast as they can.

Prices will keep falling until the average approved mortgage is about 90% of the average house price, and the average approved mortgage is about three times the average annual salary. That means half the houses in the country need to be selling for less than a hundred thousand quid. 240k houses should be ridiculously flash places in great areas, not decent family homes in middling areas - at that kind of money, they should be limited to people on seventy to eighty thousand a year (sole income, because the banks aren't going to be interested on doing three times joint salary).

Until we get there, we're not finished falling.

Learpholl

desertcircus wrote: »

they should be limited to people on seventy to eighty thousand a year (sole income, because the banks aren't going to be interested on doing three times joint salary).

I understand and agree with a lot of what you're saying but whats the reasoning behind this? Why should banks not consider joint salaries for joint applications?

donalg1

Snakeblood wrote: »

But low compared to what? Over the last 30 years, taking a normal inflation into acount, they're massively overpriced. They may be low compared to five years ago, but over an average, they're not.

Ok so if there is a four bed detached house on an acre for sale in the country in County Wicklow say for €250k how low would be acceptable for you.

Theboinkmaster

donalg1 wrote: »

I think now if you are in a position to save €575 per week you dont really need to be worrying about whens the best time to buy a house. Sure in a week and a half you would have the monthly mortgage paid and then you have the other two and a half weeks wages to either save, spend or throw onto the mortgage aswell

Those figures are illustrative. But yeah between 2 of us we can save over €20k per year and i dont 'worry' about when best time to buy is but it certainly won't be in the period of the sharpest declines in Irish history - I'm happy to wait to nearer the bottom. Don't care about buying at the absolute bottom but within 10% of it I'd be happy. Just because we can doesn't mean we should. And just because we're financially comfortable isn't a reason to throw away thousands of euro.

It's called financial sense and prudence and many posters around here could use some.

donalg1

Theboinkmaster wrote: »

Those figures are illustrative. But yeah between 2 of us we can save over €20k per year and i dont 'worry' about when best time to buy is but it certainly won't be in the period of the sharpest declines in Irish history - I'm happy to wait to nearer the bottom. Don't care about buying at the absolute bottom but within 10% of it I'd be happy. Just because we can doesn't mean we should. And just because we're financially comfortable isn't a reason to throw away thousands of euro.

It's called financial sense and prudence and many posters around here could use some.

And waiting a few years therefore missing out on TRS isnt throwing away thousands of euro bearing in mind TRS in the first year at 25% on €200k at 5% would be somewhere in the region of €200 per month or 2,400 for year one alone, then you still got the other six years to consider. And thats before you consider the higher interest rates you will have to pay in a couple of years

Theboinkmaster

donalg1 wrote: »

And waiting a few years therefore missing out on TRS isnt throwing away thousands of euro bearing in mind TRS in the first year at 25% on €200k at 5% would be somewhere in the region of €200 per month or 2,400 for year one alone, then you still got the other six years to consider. And thats before you consider the higher interest rates you will have to pay in a couple of years

Thanks for proving my point on financial sense, you need to re-do your sums. If that property drops another 30% over the next 3 years that's €60k. If you mortgaged that it'd be well over €100k over the life of a mortgage. Losing TRS would be the least of my concerns.

And we'll all be paying higher interest rates in a few years btw :rolleyes:

donalg1

Theboinkmaster wrote: »

Thanks for proving my point on financial sense, you need to re-do your sums. If that property drops another 30% over the next 3 years that's €60k. If you mortgaged that it'd be well over €100k over the life of a mortgage. Losing TRS would be the least of my concerns.

And we'll all be paying higher interest rates in a few years btw :rolleyes:

Not if you are on a five year fixed rate, you will still be paying the same in a couple of years!!!

And just because the average price is falling doesnt mean that the house the op is looking at will fall by the same amount, hence the word average. Chances are the average price is being driven down by new houses to the market, with sellers hoping for a quick sale due to them losing their job or maybe a seperation from their spouse.

argosy2006

Way i look at it is if you really like a place, and its say 280,000 offer 200,000 and walk away. do it 10-20 times with different places i bet you will get them chasing you, least one or two might,,,,,

Squall19

fricatus wrote: »

Congratulations! I hope you'll be happy and live long there.




What a nasty, petty little comment!

To listen to some people here, you'd swear they were going to live forever... I took the plunge when I was 32 and I'm delighted I did, even though I overpaid somewhat. I didn't want to be facing into renting during my late 30s and 40s and having to move out because the landlord wanted his house back. And I didn't want to be squeezed into only being able to get a 15- or 20-year mortgage, which is what happens as you get older.

I'm in negative equity, but so what? I can still easily afford the place, and at the rate I'm paying, I'll own it outright in 21 years' time while the rest of ye are still renting!

Zuutroy is paying less than the rent would be on an equivalent house and less than 20% of the family income. There's plenty left over for the children's education! I fail to see how that's a bad deal! Sure, he/she could wait around for the bottom of the market but not everyone has that luxury!

Ciaran was a little harsh but he makes a point.

I would treat a house purchase almost like a car now, if you cant buy the car you want for cash then you cant afford it so don't buy.

House purchase should be the same.

It's a deprecating asset just like a car, television, computer, dishwasher and so on now.

Who buys a new 50k BMW now?

Prices are tumbling down and unless you have substantial savings to throw away then how can it make sense to buy?

OP is an comfortable enough position at the moment with 1/5 combined income, but his life can change quickly as his wife is pregnant with a baby on the way and if she doesn't get back into work/ if it doesn't make financial sense with creche fees of 12k a year.

Then he is down to 1/3 combined income and seeing as he is on very good money about 40-50k year he probably wont be entitled to much social welfare payments for his family with that kinda take home pay.

1/3 combined income is manageable when renting as landlord is paying for upkeep.

We have to be like other countries now and be very very wary of banks and try to get as small a mortgage as possible, I am petrified of taking a mortgage alot of people aren't which is very strange.

Fighting Irish

desertcircus wrote: »

How is it not a good time to buy? Seriously?

At the moment, house prices are dropping

lol, buying while prices are dropping imo is even more daft than buying when they were at the peak

Fighting Irish

Theboinkmaster wrote: »

Those figures are illustrative. But yeah between 2 of us we can save over €20k per year and i dont 'worry' about when best time to buy is but it certainly won't be in the period of the sharpest declines in Irish history - I'm happy to wait to nearer the bottom. Don't care about buying at the absolute bottom but within 10% of it I'd be happy. Just because we can doesn't mean we should. And just because we're financially comfortable isn't a reason to throw away thousands of euro.

It's called financial sense and prudence and many posters around here could use some.

Perfect!

donalg1

Theboinkmaster wrote: »

Those figures are illustrative. But yeah between 2 of us we can save over €20k per year and i dont 'worry' about when best time to buy is but it certainly won't be in the period of the sharpest declines in Irish history - I'm happy to wait to nearer the bottom. Don't care about buying at the absolute bottom but within 10% of it I'd be happy. Just because we can doesn't mean we should. And just because we're financially comfortable isn't a reason to throw away thousands of euro.

It's called financial sense and prudence and many posters around here could use some.

And taking out a mortgage you can easily afford isn't financial sense and prudence.

The economic problems facing the country today are as a result of people taking out mortgages they couldnt afford which isn't financial sense or very prudent, thats the difference.

If you have found a house you are happy with and could see yourself living in for the rest of your life, and you can afford the mortgage repayments, and the bank is prepared to give you a mortgage why should you not buy it?