Buy now or wait 6 months or a year

Shinbin223

Hi all just looking for advise/expertise on this.
So I'm early 30s, single, no dependants. My annual income is €46,000 approximately.
I have savings of approximately €20k and I am currently paying monthly rent of €240. I have a direct debit going to savings accounts monthly and have a small car loan of about €3k.

I intend to purchase a house within the next 2 years max but the constant story in the media about prices rising rapidly has me in two minds about what to do.
There is a house in a town nearby for €175k. To me that seems too high of a mortgage for one person. I have done the figures and while I can afford the mortgage, things would be very tight and if boiler was to break, or any other similar issue I worry about my ability to afford the mortgage plus all the associated costs.

I am just wondering if anyone in the know or with more expertise than me would have advise on what to do based on the rising prices.
Should I keep saving for more of a deposit and be more financially comfortable and wait 6/9 months to apply?
Or should I buy now (mortgage pending obviously) with the view that if prices are only going to rise I'd be better off to make a purchase in the next month or two?

Bubbaclaus

A mortgage of 155k would only be around 700 a month, that's a lot less than what many are paying for a single room around the country currently, and you're getting ownership of a valuable asset while you're at it. Seems like a good deal to me.

Moomintroll99

Assuming there's more than one bedroom, would you be prepared to have a lodger/flatmate? Tax free income could help out a lot rebuilding your savings a bit.

I think you sound pretty ready, as long as you like the house/area and are happy to be there for the next several years.

Idbatterim

what are your circumstance? are you living at home? Id probably advise to buy, even despite the dirt cheap rent...

Shinbin223

I'm renting near where my job is which is about 45 minutes from home and where I am currently looking to buy. I would hope to change jobs nearer to home but if that didn't work out, my current job would still be a doable commute.
I like the house but if someone told me I could get nicer for similar money in 6-9 months I'd 100% wait.
I'm just trying to weight up how the market might be in 6/9 months and determine if spending that time building up more of a deposit is going to be cancelled out anyway if prices climb rapidly in that timeframe.
Do people envisage prices climbing extremely quickly in the near future?! I'd have to apply for an exemption to afford the €175k I am thinking so if they climb much further I wonder if I'd be able to afford anything at all.

Idbatterim

nobody can say anything with absolute certainty, but I assume prices in the area you refer to, have been increasing? See if you buy in say 10 months, you are down 10 months rent. Plus the likely increase in house price, plus the interest on that extra amount...

catrionanic

6-9 months isn’t much time. Have you got mortgage approval yet? That can sometimes take a month or so.

Honestly, that sounds like a decent deal. And repayments of around €700 are very doable on your income. Would you consider getting a lodger for a while at first? That way, it takes the pressure off and allows you to rebuild your savings a bit.

Bubbaclaus

Shinbin223 wrote: »

I'm renting near where my job is which is about 45 minutes from home and where I am currently looking to buy. I would hope to change jobs nearer to home but if that didn't work out, my current job would still be a doable commute.
I like the house but if someone told me I could get nicer for similar money in 6-9 months I'd 100% wait.
I'm just trying to weight up how the market might be in 6/9 months and determine if spending that time building up more of a deposit is going to be cancelled out anyway if prices climb rapidly in that timeframe.
Do people envisage prices climbing extremely quickly in the near future?! I'd have to apply for an exemption to afford the €175k I am thinking so if they climb much further I wonder if I'd be able to afford anything at all.

3.5 times 46k as per your OP is 161k, so you wouldn't need an exemption.

Appledreams15

House prices have never gone up and up jn our history have they? Remember the last time that people were advised to buy because house prices were only going to get higher, negative equity. You have a great amount of rent.

Idbatterim

of course they will go down again at some point, but its probably years off... What my mates in dublin wouldnt give to be able to buy, once the price isnt over the top, you can comfortably manage mortgage and its a long term property, go for it...

what is your proposal appledreams? Wait another few years, hope it crashes back down, hope that you can also get a mortgage then, after years of waiting and hope the the crash is severe enough to drop prices back to current levels and have paid for the rent in the mean time? :rolleyes:

Heres Johnny

My personal opinion, and it's only an opinion, is that prices are near the top in cities and suburbs anyway. I get to review a lot of data coming in from pension and life insurance applications, and there is a huge cohort of people in the first time house buying ages of late 20s to mid 30s earning in the 40-50k bracket.
In fact the amount above this earning is very very low. Those much below are going to struggle to get a mortgage too.
Let's take the midpoint of 45k x 2 people so joint income of 90k.
Multiply by 3.5 and that gives you 315k plus a deposit of say 20k and that gives you the price of a 3 bed semi around Dublin of 330-340k which is what we see at the moment. There is of course the 400-700k new builds but they are not for the masses, they are for trader uppers with equity in the most part.
Now, wages are pretty stagnant so unless banks relax lending rules I can't see prices for standard 3 bed semi in Dublin in normal areas rising much more.
What might happen is areas less desirable because of distance, perception or whatever will start to creep towards this level but will have to stay a little bit behind because of lack.of demand.
So for these reasons, I think prices will level off. No crash this time, which I did predict last time and held off buying my own until that happened, but a levelling off coming pretty soon.
So I wouldn't be in a mad rush to buy but I also think with your 46k salary you can afford to buy if you want and I think you'll be ok with the repayments on a 175k house, and a mortgage of around 150k.
It's going to cost you about 700 a month but it's amazing how quick you become accustomed to paying the mortgage and the bills.
I'd say go for it if it's the right house for you.

All the above is opinion only based on my own professional analysis and not to be treated as fact!!

lau1247

don't forget Help To Buy scheme which will finish in 31/12/2019.. based on income mentioned, your tax from the last 4 years should be more than enough to make you eligible assuming you are first time buyer (sounds like you are)

Bubbaclaus

lau1247 wrote: »

don't forget Help To Buy scheme which will finish in 31/12/2019.. based on income mentioned, your tax from the last 4 years should be more than enough to make you eligible assuming you are first time buyer (sounds like you are)

Only if it's a brand new property though.

lau1247

Bubbaclaus wrote: »

Only if it's a brand new property though.

good point, it slipped my mind.

Sausage dog

Look at what you are comfortably saving every month with the direct debit & add your rent to that. Does that cover the potential repayments of the mortgage. If it does it should allay any fears you may have about affordability. Also, think long term, as in is the house in a good location, will it sell again easily enough in the future if you choose to sell it, or is it in a strong rental area, if you need that option. It would be worth your while going to a bank/broker and seeing what mortgage you would qualify for & at what repayments/rates. If you need to pay off loans, now might be a good time to do that or if you need to up your savings rate to show you can afford repayments etc.

Appledreams15

Idbatterim wrote: »

of course they will go down again at some point, but its probably years off... What my mates in dublin wouldnt give to be able to buy, once the price isnt over the top, you can comfortably manage mortgage and its a long term property, go for it...

what is your proposal appledreams? Wait another few years, hope it crashes back down, hope that you can also get a mortgage then, after years of waiting and hope the the crash is severe enough to drop prices back to current levels and have paid for the rent in the mean time? :rolleyes:

No I would buy abroad, I wouldn't buy in Ireland. 
Though I understand it is different if you have children/want to be close to family

Alkers

Why is your current rent so low? Are you happy in the place you are renting? As the rent is so low, if you're happy living there you should remain and continue saving, on your salary and low rent, you should be saving a lot.
Pay off the car loan from savings

kaymin

Assuming location is okay and there's reasonable activity in the marketplace then as long as rebuild cost exceeds the selling price (as it does in many places outside Dublin) I'd feel reasonably confident you're getting a good deal. Prices in the long run need to exceed rebuild costs so that's the direction they're going to have to take in the future (in the long run).

clio_16v

Shinbin223 wrote: »

.

My annual income is €46,000 approximately.
I have savings of approximately €20k and I am currently paying monthly rent of €240.

I earn 26k, pay 925 rent plus bills and have a dependant. I'm envious and say buy as long as its an area you can see yourself staying for a few years at least

bigpink

Shinbin223 wrote: »

Hi all just looking for advise/expertise on this.
So I'm early 30s, single, no dependants. My annual income is €46,000 approximately.
I have savings of approximately €20k and I am currently paying monthly rent of €240. I have a direct debit going to savings accounts monthly and have a small car loan of about €3k.

I intend to purchase a house within the next 2 years max but the constant story in the media about prices rising rapidly has me in two minds about what to do.
There is a house in a town nearby for €175k. To me that seems too high of a mortgage for one person. I have done the figures and while I can afford the mortgage, things would be very tight and if boiler was to break, or any other similar issue I worry about my ability to afford the mortgage plus all the associated costs.

I am just wondering if anyone in the know or with more expertise than me would have advise on what to do based on the rising prices.
Should I keep saving for more of a deposit and be more financially comfortable and wait 6/9 months to apply?
Or should I buy now (mortgage pending obviously) with the view that if prices are only going to rise I'd be better off to make a purchase in the next month or two?

Your in a very lucky position.240 wouldn’t get you a ok room in Limerick atm

zl1whqvjs75cdy

kaymin wrote: »

Assuming location is okay and there's reasonable activity in the marketplace then as long as rebuild cost exceeds the selling price (as it does in many places outside Dublin) I'd feel reasonably confident you're getting a good deal. Prices in the long run need to exceed rebuild costs so that's the direction they're going to have to take in the future (in the long run).

Rebuild cost will never exceed the selling price as it doesnt include the value of the land.

kaymin

donkeyoaty0099 wrote: »

Rebuild cost will never exceed the selling price as it doesnt include the value of the land.

Not sure where you're getting your information - rebuild cost exceeds selling price up and down the country with a small number of exceptions.

zl1whqvjs75cdy

kaymin wrote: »

Not sure where you're getting your information - rebuild cost exceeds selling price up and down the country with a small number of exceptions.

House in Dublin costs 500 k to buy. Owner moves in. House burns down. Owner now has to pay to rebuild. How is the rebuild cost going to be more than the sale price of 500 k as the owner already owns the valuable land?

Also, if rebuild is more than sale price developers must be running a very dodgey business model. Sale price has to be higher than build price for the whole thing to work

Alkers

donkeyoaty0099 wrote: »

House in Dublin costs 500 k to buy. Owner moves in. House burns down. Owner now has to pay to rebuild. How is the rebuild cost going to be more than the sale price of 500 k as the owner already owns the valuable land?

Also, if rebuild is more than sale price developers must be running a very dodgey business model. Sale price has to be higher than build price for the whole thing to work

House in Leitrim costs 80k to buy. House burns down...

kaymin

donkeyoaty0099 wrote: »

House in Dublin costs 500 k to buy. Owner moves in. House burns down. Owner now has to pay to rebuild. How is the rebuild cost going to be more than the sale price of 500 k as the owner already owns the valuable land?

Also, if rebuild is more than sale price developers must be running a very dodgey business model. Sale price has to be higher than build price for the whole thing to work

The OP is looking to buy a house 'in a nearby town' for 175k. I think I can safely say he is not looking to buy in Dublin.

Selling prices are below rebuild costs in many rural locations / town's. The whole point of my post which has gone over your head is that this is not sustainable and needs to reverse in the long run but meanwhile the OP could avail of a bargain before it does reverse.

Captain Flaps

Bubbaclaus wrote: »

A mortgage of 155k would only be around 700 a month, that's a lot less than what many are paying for a single room around the country currently, and you're getting ownership of a valuable asset while you're at it. Seems like a good deal to me.

I pay 700 for my share of rent currently, making a few grand less than OP. Unless they're going on crazy coke and hooker binges every weekend they'll be fine.