Buy in 2012 or 2013

davet82

I had been planning to hold out til 2013 to buy a house (also it will be the second half of 2012 before I am ready finacially to buy my first home hopefully)

Should I still wait it out for further price drops or take advantage of the last year of mortgage relief announced in the budget? How much of a saving could be made by buying and availing of the relief?

all opinions welcome

DoesNotCompute

wait until you're financially ready to afford the mortgage repayments, home insurance, life insurance, solicitor's costs, any additional works that need to be undertaken to make the house habitable (i.e. tiling, flooring, etc), etc, etc, etc. No point over-extending yourself.

In theory, you shouldn't be relying on Mortgage Interest Relief as an indicator as to whether you can afford monthly repayments, but as a relief.

Zamboni

Save like hell and buy at the bottom of the market.

wench

The relief, should you be able to maximise it, would be
Single person, €10,000 max interest/year = €13,750
Couple, €20,000 interest = €27,500

Zamboni

DoesNotCompute wrote: »

In theory, you shouldn't be relying on Mortgage Interest Relief as an indicator as to whether you can afford monthly repayments, but as a bonus (for want of a better word).

And a +1 on this.

davet82

I ment i didnt want to throwing money away if i could make a big saving by buying in 2012. Finacially ready is when I have the deposit required (currently saving) but though maybe there were bigger drops in house prices the following year.

I noticed the article in last weeks paper saying 'rent not buy til 2013', this week its 'take advantage of 2012 mortgage relief'...

And thanks for replys

odds_on

Seeing as you won't be buying until the 2nd half of 2012, just wait and see what is happening.

No harm in starting to keep a note of the properties that interest you and as time goes on, see which ones have been sold and which are still for sale.

I am going to buy soon (basically, I will need somewhere from early next year and I don't want to rent) and have a small database with all the properties that interest me. I have over 20 areas where I award points and this also helps to show which properties are the best for me. Incidentally, I've been looking for over a year, but somewhere there will be a sale.

Unfortunately, estate agents are usually pretty useless at providing sufficient info in their adverts - those houses / apartments don't get as many points and do not come high in my list. This way, I know which properties I want to view first.

Furthermore, if you e-mail an estate agent - don't expect a reply. I have e-mailed and sent another e-mail asking for a reply to the original, and guess what - still no reply. If I was the seller, I would be very worried. Perhaps sellers should request any and all information as regards interested buyers or people contacting the agents.

robd

davet82 wrote: »

I ment i didnt want to throwing money away if i could make a big saving by buying in 2012. Finacially ready is when I have the deposit required (currently saving) but though maybe there were bigger drops in house prices the following year.

I noticed the article in last weeks paper saying 'rent not buy til 2013', this week its 'take advantage of 2012 mortgage relief'...

And thanks for replys

I've been looking over the last few months but have largely given up due to the delusional prices in the area I'm looking.

It's possible that the interest relief will continue to prop up parts of the market for 2012. It might even create the fabled dead cat bounce. The reality is that the savings it gives will be priced into the house, so if you wait till 2013 the house will be reduced by at least the savings you would make by buying in 2012.

The other think is 2014. Latest indications are that €100 household charged will be replaced by this valuation based taxed then. Then there's water charges. My estimate is that 3 bed in Dublin will be circa €1200 per annum household charge and circa €400 per annum water charges. I'd expect this to bring market down further again.

So I'm hmmhing and hawing at the moment. Guess I'll see what happens in the New Year. If I see stuff coming down a bit I might buy but I'm in no hurry as ultimately think it will come down to meet me.

davet82

thanks robd, your reply has definatley given me more food for thought...

i guess all i can do is sit tight til i am ready to buy and assess the situation at the time

thanks for opinions guys

gurramok

The price of your house will outweigh in priority any savings on the relief, the relief only a factor in the costs.
Last year, FF did the exact same thing. "buy before 2012 or you will lose your special offer relief". Did it prop up the market? Hell no. The price of property as well as mortgage finance is the crux.

I myself was thinking of buying this year but the selection of properties with their insane price ranges did not appeal to me, price was and is my number one concern, not some mortgage relief gimmick.

johndaman66

odds_on wrote: »

Furthermore, if you e-mail an estate agent - don't expect a reply. I have e-mailed and sent another e-mail asking for a reply to the original, and guess what - still no reply. If I was the seller, I would be very worried. Perhaps sellers should request any and all information as regards interested buyers or people contacting the agents.

Good point re estate agents. In fact its a point you could probably extend to many sectors in Ireland. I have to say the English are much more on the ball when it comes to responding to e-mails. If the EA puts an email contact address in an ad they are obviously suggesting e-mail as a means of communicating with them. If they don't bother checking and/ or responding to e-mails well thats not a good start in my book.

I'm sure we'd both agree that e-mail is not the most fantastic means of communicating, especially considering were talking about a property. But sometimes from a buyers point of view an email response is perfectly adequate to answer a question which immediatley rule in or out a particular property and get the ball rolling.... Lets face it many of their adds can be pretty short on vital information. I'm sure like myself there are many others who don't get the time or the privacy to talk to an EA on the phone in the regular 9-5 hours weekdays.

johndaman66

robd wrote: »

It's possible that the interest relief will continue to prop up parts of the market for 2012. It might even create the fabled dead cat bounce. The reality is that the savings it gives will be priced into the house, so if you wait till 2013 the house will be reduced by at least the savings you would make by buying in 2012.

What I deduce from your above comments is that all other things being equal, you reckon it will be much of a muchness whether you buy in 2012 or 2013 if your taking out a considerable mortgage to finance the purchase?

If on the other hand you are buying from savings or largely from savings supplemented by a small mortgage you might be best advised to hold off until 2013?

kildon

I don't think anyone shouold make a decision based on what trs they might get, its here today but could very easily be gone in next years budget. What I'd be thinking about is how much the price has come down already. Say its down 60% (assuming this is whats agreed with seller and is below asking price on daft or myhome) and the CSO index is 45% down, is it a good deal, will waiting till 2013 make a difference?? I don't know. think it would be helpful to readers in hearing from people who have bought recently and if they had any fear that the value might drop even further

johndaman66

kildon wrote: »

think it would be helpful to readers in hearing from people who have bought recently and if they had any fear that the value might drop even further

Is that not a bit subjective though? I would hazard a guess that most who bought recently don't expect the market to drop anymore or at least not much more, hence why they may have bought?

Supercell

johndaman66 wrote: »

Is that not a bit subjective though? I would hazard a guess that most who bought recently don't expect the market to drop anymore or at least not much more, hence why they may have bought?

We closed last Friday does that count?

For us the decision to buy now instead of wait were :-

1) Baby on the way, wanted stability of residence and also we wont be able to borrow enough to buy in our desired area if we wait until after the baby is born (single income family).

2) Price accepted - yes the market is about 10-20% overvalued in SCD roughly to bottom, it doesn't mean all vendors are in lala land. We did probably pay about 10% more than it will be worth at bottom i reckon, but its the best deal we can get right now in our desired area. There is no other comparable house in our area anywhere close to what we went sale agreed on from what i can see in myhome or daft. I think our sellers had a bit of cop on and got maybe 10% higher than they would have if they waited another year or so.

No doubt some will come on and say a 5 bed detached in Dalkey will be 200,000 euro in 2017 and fair play to them. I hope reality matches their dreams!
We can currently pay the amount we agreed comfortably so it was the right decision for us at this time.

robd

johndaman66 wrote: »

What I deduce from your above comments is that all other things being equal, you reckon it will be much of a muchness whether you buy in 2012 or 2013 if your taking out a considerable mortgage to finance the purchase?

If on the other hand you are buying from savings or largely from savings supplemented by a small mortgage you might be best advised to hold off until 2013?

In regard to your 2nd paragraph, that's what I believe, yes.

In regard to the 1st paragraph, that's not quite what I believe. If houses were at the bottom and flatlining (not going up or down) then that would be what I believe as I think the savings in TRS will be discounted off the price in 2013. However houses are still coming down 15% per year on top of that in some areas. So it's area dependent. The leafier suburbs in Dublin still have 30%+ to go IMO, for example. They're only down 30-40% from peak at the moment.

However like the poster above you have to buy sometimes cause you have a kid on the way or you can't stand renting anymore. So that 15% or 30% maybe over 2-3 years mightn't mean so much to you.

Zamboni

Supercell wrote: »

We closed last Friday does that count?

For us the decision to buy now instead of wait were :-

1) Baby on the way, wanted stability of residence and also we wont be able to borrow enough to buy in our desired area if we wait until after the baby is born (single income family).

Stability of residence? What does that mean?
Is every child in rented accomodation in unstable residence?

Ray Palmer

WHat you will get here is the exact same view of people who said the prices will keep going up. One view prices will only go one way for the future untill some point then it will change.

When somebody tells you that the prices are "dillusional" in the area they want it says a lot. Basically if nobody will sell their houses in that area less than this "dillusional" point that actually is the price of the property. A closed market with no extra supply in that area soemthing has to give. There is a point at which nobody will sell and a point people will sell. It doesn't matter what the buyer thinks it is the people who are selling and have the stock think.

This is basic economics. There is a point where the vacant property will be sold but certain areas will still be expensive as people there don't need to sell so constrict supply. THa banks being so risky at the moment is a huge issue.

I'll put on asbesto pants now as people start to flame they magically know how and when the furture will unfold. I wouldn't buy now as lots of uncertainties with the Euro and the banks.

Idbatterim

Should I still wait it out for further price drops or take advantage of the last year of mortgage relief announced in the budget?

when the morgage relief goes, it will further lower prices... what time of property do you intend to buy op, where is it located and what is the asking price?

Posy

Zamboni wrote: »

Stability of residence? What does that mean?
Is every child in rented accomodation in unstable residence?

Unstable in regards to not knowing where you will be living from one year to the next.

johndaman66

robd wrote: »

In regard to your 2nd paragraph, that's what I believe, yes.

In regard to the 1st paragraph, that's not quite what I believe. If houses were at the bottom and flatlining (not going up or down) then that would be what I believe as I think the savings in TRS will be discounted off the price in 2013. However houses are still coming down 15% per year on top of that in some areas. So it's area dependent. The leafier suburbs in Dublin still have 30%+ to go IMO, for example. They're only down 30-40% from peak at the moment.

However like the poster above you have to buy sometimes cause you have a kid on the way or you can't stand renting anymore. So that 15% or 30% maybe over 2-3 years mightn't mean so much to you.

In general I would be inclined to agree with your comments. Holistically I believe house prices will have to drop somewhat yet. Meddling in the property market by the government might delay this inevitable to a certain extent but it will not ultimately prevent the inevitable from happening.

Looking at daft.ie I do see certain properties in my area are approaching realistic asking prices if not there already. And even moreso if the vendors are willing to play ball and entertain offers I firmly believe properties can be attained for realistic prices, prices that I would consider sustainable long-term. Hence I believe you can now begin to look at the market on a property by property basis. The other side of this is that up to recently enough as a potential buyer I wrote off the entire market as I don't believe there was any value to be had there. That doesn't mean I'll be rushing out to buy either.

I would have to somewhat disagree with your last comment. Sometimes you can have a bad run of renting, awkward, uncooperative Landlords etc. and I could see why somebody would yearn to buy after this but that doesn't mean you should either, or should the fact that you have kiddies or one on the way necessarily shift the goalposts. Granted, its not ideal moving from one area to another with kids in particular after they have started school. But I don't think it should necessarily mean one needs to buy with the pitter patter of tiny feet on the way, not by a long shot. And just because you move I wouldn't think that makes for a less stable environment for kids, as many would seem to suggest. I believe stability for children stems from the quality of their parenting and upbringing. I don't see how a move from one residence to another should have any serious impact on their stability to any great extent

Supercell

Zamboni wrote: »

Stability of residence? What does that mean?
Is every child in rented accomodation in unstable residence?

No, lets not get too dramatic :rolleyes:
I've rented over 20 years now and moved around 10 times...not joking, I've lost count.

House shares with nightmare tenants , tenants that moved back to mammy, tenants that bought houses/apartments, tenants that emigrated. Grotty bedsits, apartments that were sold, houses that were sold. House that was becoming part of an equestrian centre...really!..

I'm just too old now for all that, I need stability. Nobody is moving out, kicking me out or whatever for a long long time now. I'm sure a young energetic Zamboni family can rent a dynamic exciting stable place for their kids to have a wonderful upbringing. But Supercell is an old fart and needs to put down roots.

Zamboni

Posy wrote: »

Unstable in regards to not knowing where you will be living from one year to the next.

What about unstable in regards to knowing whether you will be in employment and able to pay the mortgage from one year to the next.
The idea that having a mortgage on a house provides stability is a misnomer in this country.
You are counting on full employment and/or a government to maintain a repossession moratorium. Neither of which is a definate.

professore

Zamboni wrote: »

Stability of residence? What does that mean?
Is every child in rented accomodation in unstable residence?

Since the rental laws favour landlords so much here and the leases are generally short then yes that is correct.

professore

Zamboni wrote: »

What about unstable in regards to knowing whether you will be in employment and able to pay the mortgage from one year to the next.
The idea that having a mortgage on a house provides stability is a misnomer in this country.
You are counting on full employment and/or a government to maintain a repossession moratorium. Neither of which is a definate.

In that case you won't be able to keep up your rent repayments either, so you'll have to apply for social housing anyway. Without rental reforms buying will always be a better option if you can afford it, esp for families.

Balmed Out

You can have a degree of stability of residence when renting. The gf and I moved in together nearly 5 years ago and after narrowing it down to 2 or 3 we asked around about who owned them and picked the house owned by a school teacher who had moved to a school 50km away but would in all likelyhood be retiring to the area in 15 years or so.

One issue that would push me eventually towards buying is the fact that I hate to do anything other then make cosmetic changes to the house. When we have a toddler rather then a baby that might make a difference.

Zamboni

professore wrote: »

In that case you won't be able to keep up your rent repayments either, so you'll have to apply for social housing anyway.

Renters have labour market mobility.

gurramok

Zamboni wrote: »

What about unstable in regards to knowing whether you will be in employment and able to pay the mortgage from one year to the next.
The idea that having a mortgage on a house provides stability is a misnomer in this country.
You are counting on full employment and/or a government to maintain a repossession moratorium. Neither of which is a definate.

There is far much support from the state when you have a mortgage than when renting. That 1 year mortgage moratorium comes to mind and the possibility of reduced outgoings via repayments with the banks. Thats not possible with a landlord who can kick you out onto the street when you go into arrears. Also social housing is a no-no, you can be waiting years for a place especially when you are single.

Ray Palmer wrote:

There is a point at which nobody will sell and a point people will sell. It doesn't matter what the buyer thinks it is the people who are selling and have the stock think.

It ain't a sellers market. Its a buyers market. If sellers won't sell and play a waiting game, they'll be waiting a very long time(years) until the economy and demographics of buying adults picks up again.

Theboinkmaster

Supercell wrote: »

We can currently pay the amount we agreed comfortably so it was the right decision for us at this time.

What about when the ECB rate rises to 3% and your monthly repayment doubles?

robd

Ray Palmer wrote: »

When somebody tells you that the prices are "dillusional" in the area they want it says a lot. Basically if nobody will sell their houses in that area less than this "dillusional" point that actually is the price of the property. A closed market with no extra supply in that area soemthing has to give. There is a point at which nobody will sell and a point people will sell. It doesn't matter what the buyer thinks it is the people who are selling and have the stock think.

OK I did say "dillusional" so I should try to clarify. I do appreciate what you're saying alright in regard to the economics of it.

What I'm seeing is the locality I like is 3 bed houses priced between 2.5 to 3 times the price of the 3 localities that surround it. 4 bed houses are priced 4 to 5 times 3 bed houses (in surrounding areas, not enough 4 beds to compare). 4 bed houses are in short supply thus are really expensive. My understanding is that people who are buying want there 1st choice locality, want a 4 bed house and want a south facing back garden. Hence these prices are the highest. It seems to go in waves, hence my use of delusional. Asking prices are 20-25% dearer than last year. This seems to be the way, put them up at unrealistic asking price and gradually reduce due to lack of interest. Makes those that are up longer and have been reduced seem cheap and hence attract buyers.

It's just very frustrating looking on from the sidelines.

The other thing is that future taxation policy will likely bring houses down much further in the better areas. A move away from transaction based taxes (stamp duty) to yearly property taxes should encourage a clearing of houses that are just sitting there cause sellers want much higher than buyers are willing to pay. Of course, you've got to have penalties for late payment of said taxes if this is to work.

robd

johndaman66 wrote: »

I would have to somewhat disagree with your last comment. Sometimes you can have a bad run of renting, awkward, uncooperative Landlords etc. and I could see why somebody would yearn to buy after this but that doesn't mean you should either, or should the fact that you have kiddies or one on the way necessarily shift the goalposts. Granted, its not ideal moving from one area to another with kids in particular after they have started school. But I don't think it should necessarily mean one needs to buy with the pitter patter of tiny feet on the way, not by a long shot. And just because you move I wouldn't think that makes for a less stable environment for kids, as many would seem to suggest. I believe stability for children stems from the quality of their parenting and upbringing. I don't see how a move from one residence to another should have any serious impact on their stability to any great extent

I just wouldn't criticize anyone for deciding to buy under this circumstances. Long term tenancies and good quality well located houses (rather than apartments) are a very under served market in this country. It's more an emotional subjective decision rather than an objective one when faced with the decision when kids are involved.

Objectively you're 100% correct but not everything is that black and white.