Buy now or wait for sanity to return to the market?

1st dalkey dalkey

Some of you people are clearly quite young.
I bought my first home in the 70's. Newly married, both working, we were happily comfortable. Then nature took it's course and we were 3, very shortly 4. My wife gave up work to become our home=maker, and we managed on one wage. We even managed to trade up on one wage after the next arrived.
The statisticians will tell you that one data point is irrelevant and, statistically, they are correct. But there are very few who could do today what I did back then. You get lies, damn lies and then statistics. They can mean everything and nothing.
I cannot prove it to the satisfaction of some people, but I know that property today is dearer for the ordinary Joe then it was back then. My experience versus that of my children is enough proof for me.
In fact it is closing on the impossible, for the ordinary Joe. And that has implications for society as a whole. And those implications have a bigger downside for the rich then anyone else. They just haven't realised it yet.

yqtwqxqm

In the 80s and even most of the 90s it was uncommon for more than one have of a married couple to be bringing in a wage.
After that it is now the norm to have at least two wages coming into a house when buying.

Also in the 80s and most of the 90s it was a lot harder to get a loan to buy a house.

Now you have more people qualifying for loans (that is changing back to fewer again now) and multiple wages of buying power.
So people with only one wage cant compete with purchase power of a couple both working.

So you have absolutely huge total household income increases compared to decades ago too.
You cant compare 1 income in the 80s to a household income in the 90s.

KomradeBishop

yqtwqxqm wrote: »

In the 80s and even most of the 90s it was uncommon for more than one have of a married couple to be bringing in a wage.
After that it is now the norm to have at least two wages coming into a house when buying.

Also in the 80s and most of the 90s it was a lot harder to get a loan to buy a house.

Now you have more people qualifying for loans (that is changing back to fewer again now) and multiple wages of buying power.
So people with only one wage cant compete with purchase power of a couple both working.

So you have absolutely huge total household income increases compared to decades ago too.
You cant compare 1 income in the 80s to a household income in the 90s.

I collected the Average Household Income stats from the Household Budget Surveys, and divided them by the Average Wage to get the ratio between the two.

This produced the following graph, which shows that the difference is not nearly enough to account for the increase in house prices:

yqtwqxqm

KomradeBishop wrote: »

I collected the Average Household Income stats from the Household Budget Surveys, and divided them by the Average Wage to get the ratio between the two.

This produced the following graph, which shows that the difference is not nearly enough to account for the increase in house prices:

Of the cohort who have bought houses?

KomradeBishop

The stats don't need to be that granular - if there was a general increase in household income for buyers, relative to a single income, from the 80's through the 00's, it'd show in that graph.

yqtwqxqm

KomradeBishop wrote: »

The stats don't need to be that granular - if there was a general increase in household income for buyers, relative to a single income, from the 80's through the 00's, it'd show in that graph.

Of course they need to be granular. We are interested in incomes of the people who drive the market. If you want to use stats to prove something, as has already been pointed out earlier in the thread by other, you need to do it right.

We all know you can manipulate stats to say anything you want.

KomradeBishop

You haven't shown any manipulation of stats - you're just going off on a tiff like the other person earlier in the thread, where you balk at the stats disproving your argument (in this case using the fallacy of 'special pleading'), and throw around accusations of manipulation - to avoid conceding the argument.

If you think you can find more granular stats than that - go ahead and gather them yourself - you're not sending me off on a wild-goose-chase, just so you can avoid conceding the point - as I've already provided enough evidence to refute it. You've provided no argument as to why such incomes wouldn't influence the above graph.

Remember: You made the claim that household incomes have increased relative to the average income - it's up to you to show it, and all the evidence we have so far, pours significant doubt on that claim.

Reminder: This is your claim:

So you have absolutely huge total household income increases compared to decades ago too.
You cant compare 1 income in the 80s to a household income in the 90s

That is 100% wrong, and is shown to be completely wrong, by the graph - you're trying to shift the goalposts now that your argument has been demolished.

athtrasna

Mod note

Let's not go down the road of lies, damn lies and statistics again please. It derails the thread. Thanks

riclad

The market is not insane ,
you can buy a house in rural areas,for 80k.
in dublin for 120k.IF you want to think about insane
look at prices in the boom,
a 2 bed apartment in a rural town i used to live in is worth 60k now.
bought in the boom for 140k.
I don,t expect big price drops in the future .
The only change i see in the near future is the government is maybe intending to build more
social housing to adress the housing crisis .
Prices are still way lower than in 2006.

yqtwqxqm

KomradeBishop wrote: »

You haven't shown any manipulation of stats - you're just going off on a tiff like the other person earlier in the thread, where you balk at the stats disproving your argument (in this case using the fallacy of 'special pleading'), and throw around accusations of manipulation - to avoid conceding the argument.

If you think you can find more granular stats than that - go ahead and gather them yourself - you're not sending me off on a wild-goose-chase, just so you can avoid conceding the point - as I've already provided enough evidence to refute it. You've provided no argument as to why such incomes wouldn't influence the above graph.

Remember: You made the claim that household incomes have increased relative to the average income - it's up to you to show it, and all the evidence we have so far, pours significant doubt on that claim.

Reminder: This is your claim:

That is 100% wrong, and is shown to be completely wrong, by the graph - you're trying to shift the goalposts now that your argument has been demolished.

I dont need to prove any stats. You are the one throwing the graphs around the place like the mean anything.
Common sense beats a made up graph every time.
Think about it.

1st dalkey dalkey

yqtwqxqm wrote: »

In the 80s and even most of the 90s it was uncommon for more than one have of a married couple to be bringing in a wage.
After that it is now the norm to have at least two wages coming into a house when buying.

Also in the 80s and most of the 90s it was a lot harder to get a loan to buy a house.

Now you have more people qualifying for loans (that is changing back to fewer again now) and multiple wages of buying power.
So people with only one wage cant compete with purchase power of a couple both working.

So you have absolutely huge total household income increases compared to decades ago too.
You cant compare 1 income in the 80s to a household income in the 90s.

I am not sure what point you are trying to make here. I bought in the 70's with two incomes, traded up in the 80's on one income. Yes loans were difficult and the ratios were tighter. 2.5 times the first income and 1.5 times the other was all we could get.
But what does that say about house prices relative to earnings?
Surely it means they were closer together then, given that you now need 3.5 times both earnings today.
As i said, I am not a statistician and am happy to believe what I believe based on what I see and experience.
I am not sure what this means for the OP. Will there be some reversion to some statistical mean? Will prices keep rising without reference to earnings? I think the former is more likely then the latter in the long run. But the market can be irrational for a long time. How long does he think he can wait?

draiochtanois

This post has been deleted.

athtrasna

Can we get back on topic please. Mod

psheaser

Property in Galway is not budgeting atm, sellers are not getting what is being asked.

Several friends have reported offers well below 35% of asking being accepted around their areas ( house that would've been up for <300k )

andekwarhola

Effects wrote: »

It's called a recession. The bubble will burst again, that's the time. It's just slightly hard to predict when, but it is guaranteed.
You sound like you're living in 2007.

Don't think you understood what I wrote.

I meant that people think property cycles are some anomalous condition that will eventually be ironed out so 'sanity' can return and the entire population of Dublin can buy a nice 4-bed detached within the canals.

1st dalkey dalkey

"The standard of houses today is massively different to those of our parents times.

It is not a comparison of like with like"

I accept your point that new houses now have a much better spec. But it is not just the new houses that are costing big money. I happened to pass my old house recently and it is up for sale again. I looked it up on Myhome.ie. I paid just over 19K for it in the late 70's. It was on the market for 300k, old spec and all.
But to get back to the op's question. I believe that there is an historical mean (ratio) of house price to earnings. A trend line, if you like, around which prices fluctuate. After the bust, prices fell well below the trend line. In the last year or so they have run above the trend line. At some point they will revert toward the line, quite likely going below again. The question is, when.
That is why I asked earlier in the thread how much time the OP had.
The downward trend will be triggered by some event. Maybe a world recession, a Brexit, a Grexit or return of the debt woes in the Euro. Even if we avoid all of those, government initiatives to increase building will ease pressure on prices. Or rising wages might attack the problem from the other end.
In short, if I was 21, I would stay at home for the next few years and wait it out. If I was 31 that might not be an option and I would just have to suck it up.

draiochtanois

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1st dalkey dalkey

Interesting link, thanks. The graphs in it do illustrate my point on a basic trendline around which prices (or rents in this case) fluctuate.

For me, though, the central point is this;

"6.6 percent is 2.5 percentage points faster than inflation, which doesn’t seem like a lot but when you do it for 60 years in a row it means housing prices quadruple compared to everything else you have to buy."

That is scary. Not just for house buyers, but for business in general. It suggests that the property business is taking an ever increasing percentage of disposable income. Bad news for any business pitching for some of that income.

degzs

psheaser wrote: »

Property in Galway is not budgeting atm, sellers are not getting what is being asked.

Several friends have reported offers well below 35% of asking being accepted around their areas ( house that would've been up for <300k )

Are you talking about Galway city or County ? What I have seen in Galway city that houses at 250k are going over 10% of asking price

NyOmnishambles

One thing that hasn't really been mentioned in this thread so far is that when the market was in bubble mode the last time and some people were sensibly trying to wait it out and time the downturn is that when the downturn happened those people couldn't get mortgages as the funding dried up

Now they probably did end up being better off whenever they were able to avail of credit but unfortunately they probably didn't get the mega bargain they were looking for

draiochtanois

This post has been deleted.

Dr Crayfish

both something 3 months ago I'm about to move into. 2 bedroom house in D5 near a dart station, when done up to high standard (new insulation, walls, floors, kitchen, everything really), still cost me less than 200k. I've a 30 year 160k mortgage on my own with repayments of 650e or thereabouts a month.
I think I did ok - prices only seem to be going up.
The reason I decided to save for a year and move home was because living alone just wasn't an option in Dublin with the prices of rent.
But having an entire house to myself is - what a f**ked up world.

Idbatterim

The reason I decided to save for a year and move home was because living alone just wasn't an option in Dublin with the prices of rent.

I agree, you either spend a very large percent of your salary to live alone. Earn enough that its not a considerable expense (why bother renting at market rates if thats the case, obviously there may be a few exceptions why you might) 3. If a couple, 1 bed is expensive, but probably an option...

Bob24

draiochtanois wrote: »

Yes, and if someone bought something at the height of the boom and got a tracker they are doing pretty ok.

They have low interest rates (for now, who knows what ECB rates will be like in 5 or 10 years), but otherwise someone who bought at the top of the boom is still spending significantly more for the same property than someone buying today (at various degrees depending on the location of the property).

Tuesday_Girl

degzs wrote: »

Are you talking about Galway city or County ? What I have seen in Galway city that houses at 250k are going over 10% of asking price

Same here, I know of 5 houses which have sold this year in Galway city and all went for above asking price (10k to 25k above asking prices of 220k-285k).

psheaser

Around the Knocknacarra area, units have been selling for significantly lower ( >20% less than asking in the past couple of months )

Looks like Dublin is over heated but there is bargains to be made elsewhere.

by the seaside

I think house prices may well drop even in "nice" areas if the macro-economic situation changes, but I don't think it will be as catastrophic as last time as it's not so overheated, and of course it may not happen. But we will be looking to buy this year if we can sort out finance for the following reasons:

1. We are paying a high rent and have a big deposit on which we receive minimal interest, so we would see mortgage repayments significantly lower than rent
2. We want somewhere to live where we can stay long-term
3. We can live with a decrease in lower prices and knowing that we might have got a better deal if we'd waited - we did fairly well out of the UK housing market and then converted to Euros at a good rate, so if we lose out this time, then so be it.
4. The risk that price continue to increase in more problematic - remember "The market can stay wrong longer than you can stay solvent".

Best of luck all of you, whatever you choose to do - it's a rubbish game.

Idbatterim

We are paying a high rent and have a big deposit on which we receive minimal interest, so we would see mortgage repayments significantly lower than rent

see this is the one scenario Where I No longer see a point in waiting I.e big deposit and market rent. Unless you thought something catastrophic economy wise was on the horizon...

by the seaside

Idbatterim wrote: »

see this is the one scenario Where I No longer see a point in waiting I.e big deposit and market rent. Unless you thought something catastrophic economy wise was on the horizon...

Yes, the point of waiting would be if you are going to get a better deal soon, but as I said, that's not a major concern for me.

The frustration is that as a recent arrival in Ireland and self-employed, it's not easy to get a mortgage, even though I can put down a 50% deposit and repayments would be approx. 50% of current rent. Still, it's not the worst problem in the world to have, when you look at families without homes.