Should I continue with buying a house in Galway in the current climate?

hotpoker

Hi all. New to boards.

So I got the wheels in motion on buying a house at Christmas following a hard few years saving for a deposit. Got the mortgage approved and then viewed and placed an offer on an a 3 bed apartment. The apartment is on the edge of Galway city. It's in a prime location, built in 2003 and on the face of it is pretty solid. The offer I put on it is 205k which was standard for this type of house in the area.

My goal for it is as a starter home, where instead of paying rent I can actually make a small sum off it by renting out the spare rooms. My plan is to save this money and the money I save on rent to put towards building my own home in the next 5-7 years. I'm 27 now. I was due to have an engineer do a report on the structure the Tuesday after Leo announced restrictions. Therefore it is in limbo.

What's people's opinions. Should I cancel the deal and hold out for a price crash or continue? This is a very different recession to last. We are undersupplied on houses in Galway and nationally but with people inevitably losing their jobs permanently the demand may also drop. Buy or hold out?

fergiesfolly

You might find more informed opinions in the Accommodation and Property forum...
https://touch.boards.ie/forum/38

reg114

hotpoker wrote: »

Hi all. New to boards.

So I got the wheels in motion on buying a house at Christmas following a hard few years saving for a deposit. Got the mortgage approved and then viewed and placed an offer on an a 3 bed apartment. The apartment is on the edge of Galway city. It's in a prime location, built in 2003 and on the face of it is pretty solid. The offer I put on it is 205k which was standard for this type of house in the area.

My goal for it is as a starter home, where instead of paying rent I can actually make a small sum off it by renting out the spare rooms. My plan is to save this money and the money I save on rent to put towards building my own home in the next 5-7 years. I'm 27 now. I was due to have an engineer do a report on the structure the Tuesday after Leo announced restrictions. Therefore it is in limbo.

What's people's opinions. Should I cancel the deal and hold out for a price crash or continue? This is a very different recession to last. We are undersupplied on houses in Galway and nationally but with people inevitably losing their jobs permanently the demand may also drop. Buy or hold out?

Honestly there is so much uncertainty out there right now I would hold off until things settle, which could be next year. We are in the middle of a once in a 100 year event with the implications for literally every aspect of Irish life and the economy very very unclear. Buying property at the best of times is fraught with uncertainty and stress, you would be inviting an awful lot onto young shoulders by rushing into something that even seasoned developers and property buyers would baulk at. Several questions we simply do not know answers to : When will Ireland's lockdown end?
Will there be a second , third wave?
How many people will be out of a job by June ?
Will a new gov be formed by June?
Will a new gov be able to rescue an economy that has been shut down for several months ?
Nobody knows the answers to any of these questions, until you can get a better picture hold on to your money.

pinktoe

Will house prices drop in price with the state of the worlds economy and uncertainty? I would think so.

Will you be still able to get a mortgage in 6+ months? I'm not so sure.

How confident are you off keeping your job if everything goes downhill?

hotpoker

reg114 wrote: »

Honestly there is so much uncertainty out there right now I would hold off until things settle, which could be next year. We are in the middle of a once in a 100 year event with the implications for literally every aspect of Irish life and the economy very very unclear. Buying property at the best of times is fraught with uncertainty and stress, you would be inviting an awful lot onto young shoulders by rushing into something that even seasoned developers and property buyers would baulk at. Several questions we simply do not know answers to : When will Ireland's lockdown end?
Will there be a second , third wave?
How many people will be out of a job by June ?
Will a new gov be formed by June?
Will a new gov be able to rescue an economy that has been shut down for several months ?
Nobody knows the answers to any of these questions, until you can get a better picture hold on to your money.

Thanks for such a detailed reply. All very valid points. My inkling is to just wait whille the process is still in limbo. When this all started I was undeterred. The longer It goes es on the more I think about walking.

hotpoker

pinktoe wrote: »

Will house prices drop in price with the state of the worlds economy and uncertainty? I would think so.

Will you be still able to get a mortgage in 6+ months? I'm not so sure.

How confident are you off keeping your job if everything goes downhill?

Hey. Thanks for your response. The first question is damn near impossible to answer imo. Id be quiet bullish on this. The banks have a lot more liquidity to the last crash. They don't make money by not lending. Provided I've my job, Get no pay cuts I should be ok.

As for my job. Without trying to sound cocky. I won't say it's recession proof but it's damn near it. I'm an engineer with a massive medical devices company. Let's say if you need the device I work on the last thing on your mind will be " can I afford it" If I do get the chop there are a lot of other employment opportunities in the west of Ireland for me.

the_syco

hotpoker wrote: »

My goal for it is as a starter home, where instead of paying rent I can actually make a small sum off it by renting out the spare rooms.

There are people who are in their tiny starter home from before the last crash, who'll be there until they die.

My question to you would be; if your job is secure, would you not just buy a house, and rent out the rooms of said house if that's your plan?

Also, the cash you have saved up; you may need it if you catch the COVID. Would advise you wait until after this goes away.

NIMAN

If you have found the house you want, can afford it, think your job is safe and would be happy with seeing a similar house close-by for less should a crash arrive, then I'd say go ahead and buy.

But bear it in mind that there could be a major recession on its way. If it is anything like the last one, the value of your house could plummet.


Its a tough call to make. Myself, I wouldn't be buying a house in these times, at least not for 12 months or so, see how all this pans out and how the Irish economy and housing market is affected.

awec

5 years is such a short period of time. I would not buy in your situation, as you are going to need your property to maintain value in the short term. For you, negative equity would actually be a problem.

Different story if you were buying a house for the long term.

DubCount

Of course you should hold off on buying in Galway - Buy in Dublin in stead - the climate is far nicer on this side of the country !! :-)

A lot of people incorrectly view buying their own home as an investment. Its not. When you buy a home to live in, you are either going to stay living there or sell up an use funds to buy somewhere else. Only your children will ever get any investment value out of it. If you find somewhere you want to live, then go for it if you can afford the mortgage and want to live there.

The impact of falling prices is only an issue if you want/need to move before values increase back to where you started. That is the only time negative equity becomes an issue. Otherwise, the passing of time will eventually fix the issue.

There are a lot of amateur economists that will tell you the prices are definitely going to fall. Maybe they are right, and you could buy a similar property next year for a lower price. Nobody knows if (or by how much) the property prices in your particular segment of the Galway market will increase/decrease. Yesterday was Brexit, today is covid-19, tomorrow will be something else. Maybe the central bank will ease up on lending rules, or a big new employer could open in Galway. The future is not outs to see, so let your decision be based on where you want to live, and not on expectations of the future.

pure.conya

hotpoker wrote: »

Thanks for such a detailed reply. All very valid points. My inkling is to just wait whille the process is still in limbo. When this all started I was undeterred. The longer It goes es on the more I think about walking.

Best to hold your horses until you know the state of the market or if there's even a market after this is all said and done, absolutely no way in the world I'd be taking on a mortgage at the moment

Pkiernan

pure.conya wrote: »

Best to hold your horses until you know the state of the market or if there's even a market after this is all said and done, absolutely no way in the world I'd be taking on a mortgage at the moment

How do you define "knowing the market"?

Just as likely that house prices will rise next year as none are being built.

Mixmistro

I would be inclined to rent a modest room instead in Galway and save for five to seven years for your new build if it suits your life circumstances. You will 'only' be 32 to 34 by then. With the apartment you will have management fees each year, insurance, fit out and maintenace costs and property tax but on the other hand, little or no tax if you use the rent a room scheme. You will also have a higher 20% deposit committment if taking out your second mortgage. Your personal circumstances may change in the interim e.g. job, location or relationship wise, or kids. I suppose you have to weigh up each side of the equation, somewhat apart from solely short and medium term property prices.

touchdown77

I work in the property scene and would not recommend to anyone to buy an apartment -- they are full of pitfalls so do your research extremely thoroughly. A house is far superior, its freehold and your not 'wasting' money on expensive management fee's.


anyway that's my tuppence (on a question you didn't ask)


On the question you did ask...definitely pull out..the old certainties are gone to be replaced with new rules