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Four reasons for a property slump, can anyone think of reasons otherwise?

  • 11-08-2005 12:35pm
    #1
    Registered Users Posts: 1,366 ✭✭✭


    I've been thinking about the property market and it looks to me like it is certain to go down for the following reasons, can anyone think why this might not be the case?

    1. Demographics: The bulk of people in ireland are 25 - 30, lots of people in this age bracket are renting so lots of appartments are being built for them to rent. In 10 years time when the bulk of people are 35 - 40 they will mostly be wanting to move out to a house in the suburbs to have kids. Appartments build today are not family friendly and are not suitable for anything other than couples with maybe one kid. This means that in 10 years time there will be way more appartments than there will be people looking to rent them, hence rents fall through the floor and investors sell up. Prices go down.

    2. Interest rates: Our interest rates are too low for the economic climate as the are set to speed up the sluggish Euro economy rather than chill the over heating Irish economy. This is all well and good for now but should Europe recover and interest rates go up, Ireland could have a debt crisis where people can't pay their mortgages. So while Ireland spirals down and the banks bad debt rises the interest rates will stay high as most Euro economys are doing fine. This will lead to the reverse situation where the interest rates will be too high for the Irish economic climate.

    3. Too many investors: 30% of Irish residential property is owned by investors (ish). This means that should rents go down significantly and house price growth level off there will be no reason for these people to continue holding on to this property. This could lead to 30% of properties going on to the market realativly easily (so long as the tennants can be kicked out at the end of the lease). Should house prices start dropping this gives the investors even more reason to sell as they still have a place to live if they sell their investment property. If more houses were owner occupied then there would be more resistence to a price free fall as people still need a place to live even if their property value is going down!.

    4. Too much debt: We currently have the fastest growing debt rates in Europe and are approaching the top of the pile in person debt as well. 60% of people in a recient survey (read in Sunday Business Post there a few weeks back) take out loans to maintain their standard of living, 60% of people are living beyond their means in other words. This is very risky in my opinion.

    So those are my reasons for doom and glood, does anyone have any reasons why this won't happen? the only thing I can think of is that immigrents will rent the appartments in town and help maintain their prices but they will only come if the economy has jobs for them...

    I'd like to see house prices come down a bit but I sure as hell don't want to see the Irish Economy go down the toilet!

    any ideas anyone?

    Cheers!

    J


«134

Comments

  • Closed Accounts Posts: 1,829 ✭✭✭JackieChan


    Whizzbang,
    If there is one thing the Irish economy has shown over the last 10 years is that it is very difficult to predict its course.
    4 years ago reports were being written about the doom that faced due to the impending property bubble crash....never happened.
    Now what appears to be happening is the soft landing. Price increases are quickly moderating and the stampy duty changes and 100% mortgages are helping this to happen slowly.
    In a sense Ireland has been 'lucky' due to the international climate. While oil prices have gone through to $40s,$50s and now in to the mid $60s a barrel its causing major hits on the GDP of other countries. In particular its hitting European growth rates and this is whats keeping the interest rates down.
    Its hard to see the price dropping over the next 6-9 months, so it could early 2007 before rates rise above current levels. Indeed rates are more likely to decreaes than increase in the next 12 months.
    The crucial thing is what happens to house prices here between now and the first interest rate rises. If the price increases are low(say 3-5%) then interest rate hikes(assuming banks have been stresstesting for +2% increases) should not cause a major problem to householders.Of course there will be individual hardships and even localised issues(eg a small/medium towns meat processing plant shuts down that employs a lot of people that are renting,some may leave the town to look for alternative employment and the owners may try to sell but find there is little market for their house) but if people dont do the equivalent of dumping shares on the stock market, then the prices will not collapse.
    Now if a larger increase in rates occurred or a major employer(an Intel/HP or Dell) was to leave that could have a far wider impact on prices.
    Has anyone ever come across what if? scenario for the Irish economy?


  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    Hi JackieChan

    Thanks for your thoughts! You are right about the difficuly in predicting how the economy is going to go, I accept that a jump in rates is really just a worse case sceanario and I'm sure that banks are going to have checks and balances to ensure they are not taking on too much dodgy debt. I also accept that the longer we have low interest rates (it could be another few years given the current way the Euro area is looking) the softer the landing will be and hance the less vulnerable we will be to panic selling by investors.

    That being said I'd still be concerned about the demographics particularly with how they will effect the price of city center apartment properties. I honestly believe that these apartments could lose a lot of value over the medium to long term.

    I reckon what we are going to see is not a sudden drop in prices but a increase in what you are getting for your money, Free fitted kitched, first years mortgage paid, free holiday, free luxury furniture, gym membership free car etc.... The industry is going to do everything it can to avoid a decrease the base house prices so they will cut into their margins instead. I think this is already happening in areas. when these freebes stop working and the base prices start going down is when we will really see if it will be a gentle softening of prices or a more serious dip.

    J


  • Registered Users Posts: 5,047 ✭✭✭Culchie


    You haven't factored in the fact that 145,000 people have arrived here for the new EU accession countries either in the last 10 months .... mostly in their 20's.

    They will all need accommodation as well, with any kids that come along.


  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    Fair point Culchie

    They will help even out the demographics so long as they stay around, does anyone know when the other EU states will start to allow them in? I think it is only Ireland, UK and one other so far?

    Also, will they pay as much rent as Irish people are willing to pay or will they pack themselves in 16 to a 4-bed apartment?

    good point all the same though.

    J


  • Registered Users Posts: 9,555 ✭✭✭DublinWriter


    Bascially I don't think any localised factors will come into play in influencing a drop in house prices.

    The main factor will be global/EU inflation over the next ten years.

    As oil is starting to skyrocket it looks like we maybe in for a bumpy ride re inflation and it could turn all into the 70's again.

    Economic patterns on the whole are generally cyclical and we are due for a massive global recession around about now.

    Certainly I wouldn't use *any* excuse to hold off buying property right now.

    On the whole, you never lose money with bricks and mortar in this country. After the currency crisis in the UK in the early 90's, property prices rebounded and then some.


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  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    Bascially I don't think any localised factors will come into play in influencing a drop in house prices.

    The main factor will be global/EU inflation over the next ten years.

    As oil is starting to skyrocket it looks like we maybe in for a bumpy ride re inflation and it could turn all into the 70's again.

    Economic patterns on the whole are generally cyclical and we are due for a massive global recession around about now.

    Certainly I wouldn't use *any* excuse to hold off buying property right now.

    On the whole, you never lose money with bricks and mortar in this country. After the currency crisis in the UK in the early 90's, property prices rebounded and then some.

    I'm not sure I follow you! we are due a recession, so buy a house? surely a recession will have a negative effect on house prices?

    currently my excuse for not buying is "I can't afford to buy anywhere I want to live" ;)

    J


  • Closed Accounts Posts: 3,031 ✭✭✭MorningStar


    1) A lot of the people who can't afford right now are renting. They want to own. These people are a big stabalising the market. The new demographics are emerging with the the split up of marriages means the new market needs more one bed places. They won't move to the suburbs

    2) Our intrest rate belongs to a big portion of the EU. It makes them more stable and less likely to increase at any speed. DUe to the Euro it is more likely they will remain low for a long long time. New rules and people are applying the old rules

    3) What are you basing 30% on? Due to the increse in the transiant population rental property is required to a much greater degree than before. the last figures I am aware of show Ireland as the highest home ownsership in the world at 89%. If it has dropped to 70% that is still one of the hishest so it isn't a problem.

    4) Fastest growing doesn't mean the worst. State deficet and welfare state distribution have changed to the individual. It's progress not a bad thing.

    Overall I am not worried by any of your concerns.

    I belive the outer suburb will move back in over the next 20 years as people won't be able to afford fuel or want the hassle of owning a car and traffic. kids raised in cars will see it as futile.


  • Closed Accounts Posts: 756 ✭✭✭Zaph0d


    two more possibile scenarios that could reduce prices
    Oversupply:
    80,000 new house starts per year can't go on for ever
    new zoning rules promoting far denser building patterns (Adamstown)

    Slow down in economy (agriculture, building and high-tech)
    outsourcing of high-tech jobs to lower cost countries
    end of farming subsidies hits agribusiness
    building jobs disappear as housing demand is satisfied

    Everyone agrees it can't go on for ever.


  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    1) A lot of the people who can't afford right now are renting. They want to own. These people are a big stabalising the market. The new demographics are emerging with the the split up of marriages means the new market needs more one bed places. They won't move to the suburbs

    2) Our intrest rate belongs to a big portion of the EU. It makes them more stable and less likely to increase at any speed. DUe to the Euro it is more likely they will remain low for a long long time. New rules and people are applying the old rules

    3) What are you basing 30% on? Due to the increse in the transiant population rental property is required to a much greater degree than before. the last figures I am aware of show Ireland as the highest home ownsership in the world at 89%. If it has dropped to 70% that is still one of the hishest so it isn't a problem.

    4) Fastest growing doesn't mean the worst. State deficet and welfare state distribution have changed to the individual. It's progress not a bad thing.

    Overall I am not worried by any of your concerns.

    I belive the outer suburb will move back in over the next 20 years as people won't be able to afford fuel or want the hassle of owning a car and traffic. kids raised in cars will see it as futile.


    1) Prices will need to come down before those people can afford to buy. That being said, it will help stablise the market. So long as people are willing to buy houses when they see prices are going down.

    2) Fair enough, rates are liekly to stay low for ages.

    3) Got the 30% from the Gunne report a while back, it might have been 35% We used to have the highest ownership, but it has gone down a lot. Transient people can help support rents but Dublin rents are still falling even with our 145,000 new Eastern European friends... I believe there are just too many places on the market and too few renters. I rented a place just last month and haggled the price down by €150/month as it had not been rented in 2 months. (found 2 month old Chicken Kiev in Freezer!;) ) It seems 6 weeks is an average down time between lettings these days and I have a number of friends who have haggled their rents down due to the ease of renting!

    4) Thats why I said "are approaching the top of the pile ", if our debt growth stablised now we could have a managable amount of debt, the problem is with the ease of credit we are surging ahead into unsustainable debt levels.

    I'm not trying to scare anyone, I'm just seeing what answers people have to my worries! ;)


  • Registered Users Posts: 9,555 ✭✭✭DublinWriter


    Zaph0d wrote:
    Everyone agrees it can't go on for ever.
    Yes it can. Name me *one* time in history when houses were more expensive than they are now?

    There might be a slump, which would make property less-unaffordable to the average person, but don't expect a dramatic readjustment.


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  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    Zaph0d wrote:
    two more possibile scenarios that could reduce prices
    Oversupply:
    80,000 new house starts per year can't go on for ever
    new zoning rules promoting far denser building patterns (Adamstown)

    Slow down in economy (agriculture, building and high-tech)
    outsourcing of high-tech jobs to lower cost countries
    end of farming subsidies hits agribusiness
    building jobs disappear as housing demand is satisfied

    Everyone agrees it can't go on for ever.


    the oversupply is an interesting one, it was 80,000 last yearm 69,000 the year before etc... it will be interesting to see if teh increases continue or if the builders decide the end is near and start scaling down? or will they mlk it for all it is worth and just accept the losses of a drop off at the end?


  • Closed Accounts Posts: 756 ✭✭✭Zaph0d


    A stock market recovery draws money out of property.


  • Registered Users Posts: 5,047 ✭✭✭Culchie


    The lending market will adjust their products, you are seeing it now with 100% mortgages, even 120%.

    In France they do 99 year mortgages on Parisien property.


    Property prices will not go down .... full stop.

    Might be a blip for a few months, but heh, guess what, they'll come back up again, just like in London. Only those who sell will realise that loss.
    (The same London that all the pessimists keep using as an example of the crash in early 90's)


  • Closed Accounts Posts: 964 ✭✭✭Boggle


    What would the effect of a 0.5% interest hike be on a standard mortgage in Dublin at the minute? For arguments sake say its a 90% mortgage on a E250 house over, say, 30 years.

    Not sure if these are average figures its just that I was wondering what would happen those families who are just about shading their repayments at the minute if their was a substantial hike... For me, thats possibly the most potent danger for houseprices - if a hike like that could push the payments above what people could afford.


  • Registered Users Posts: 533 ✭✭✭StaggerLee


    property prices may drop a little in the short term but mortgage payments wont as interest rates rise. So either way you're Banjoed.


  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    Culchie wrote:
    The lending market will adjust their products, you are seeing it now with 100% mortgages, even 120%.

    In France they do 99 year mortgages on Parisien property.


    Property prices will not go down .... full stop.

    Might be a blip for a few months, but heh, guess what, they'll come back up again, just like in London. Only those who sell will realise that loss.
    (The same London that all the pessimists keep using as an example of the crash in early 90's)


    In Paris most people rent due to the high prices of property. So perhaps Ireland is moving to a renting rather than owning setup? that being said I think tennants rights are much better in France making lifetime renting less risky.

    J


  • Closed Accounts Posts: 756 ✭✭✭Zaph0d


    Culchie wrote:
    Property prices will not go down .... full stop.
    The paradox being that the presence of a large number of investors with this belief is a strong indicator of a future crash in any market.
    Japan_Land.jpg


  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    Zaph0d wrote:
    The paradox being that the presence of a large number of investors with this belief is a strong indicator of a future crash in any market.
    Japan_Land.jpg

    looks like Mt Fuji!

    J


  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    And the Graph for the UK http://www.firsttimebuyerhelp.co.uk/images/youarehere.gif

    ignore the fact that prices dropped 50% after the other two peaks, That was only for erm, several years, property prices do not go down! ;)


  • Registered Users Posts: 5,047 ✭✭✭Culchie


    oh nice website !

    I especially like the "Why rent is not dead money " article :rolleyes:

    Listen Whizzbang, I hope there are plenty who think like you, because in another 3 or 4 years, I'll have a house I bought to let in 1998 paid off.

    That isn't meant to be a smart comment, but the reality of the situation. Rent is dead money.

    If you can afford to buy a house, go ahead and do it. Why should you be paying off my mortgage, when you can be paying off your own?


    P.S Looks like a good time to invest in Japanese Land then


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  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    Culchie wrote:
    oh nice website !

    I especially like the "Why rent is not dead money " article :rolleyes:

    Listen Whizzbang, I hope there are plenty who think like you, because in another 3 or 4 years, I'll have a house I bought to let in 1998 paid off.

    That isn't meant to be a smart comment, but the reality of the situation. Rent is dead money.

    If you can afford to buy a house, go ahead and do it. Why should you be paying off my mortgage, when you can be paying off your own?


    P.S Looks like a good time to invest in Japanese Land then

    I'm happy for you that your house to let will be paid off (10 year mortgage?), I couldn't afford a house in 98 and I can't afford one now.

    I'm looking at it like this.

    I pay rent of $575 a Month

    Option A
    Buy Appartment now
    Pay €1,796 a month mortgate (€400,000, 30 years, 3.5%)
    Let say €1450 per month of that is interest for first 5 years
    After 5 years I have paid out €107,760
    Of which €87,000 is interest
    and €20,000 is paid off the principle

    I finish paying the mortgage and pay a total of €646,624.35

    Option B
    I wait 5 years,
    Pay €575 a month on rent = €6,900 a year
    Save €350 a month (difference between mortgage and interest)
    After 5 years time I have paid out €34,500 in rent
    I have saved €20,000

    I get a 25 year mortage on €380,000 (400,000 - 20,000)
    Total repayments for which total to €570,710.87
    Add on the rent I spent in the 5 years waiting €34,500
    Add on the €20,000 I saved
    Total outlay of €625,210
    €20,000 less than if I bought now.

    The only reason this makes sense is that I believe that 5 years time house prices will be less than now. So I am effectivly paying €34,500 to put off making the decision so I can see if I'm right.

    Seeing as rents are a lot less than paying the interest on a mortgage it is currently worthwhile to continue to pay rent to put off buying a house to see if prices decrease. If rents rise significantly I have to buy as the number no longer work out, if house prises rise significantly I have to buy as number dont' work out. If house prices drop (which I think they will), or stay level I'm in the money

    Ireland is not immune to Negative Equity!

    for some reason people think we are!

    J


  • Registered Users Posts: 5,047 ✭✭✭Culchie


    Wow ...and I mean Wow.

    I didn't realise the figures were so scary now. My mortgage is less than €380 on my rental property.

    Fair play, you seem to be on top of situation.

    Aren't you still going to habve to pay interest though when you eventually take out the loan....so is it a saving or a deferral?


  • Registered Users Posts: 11,205 ✭✭✭✭hmmm


    If you're paying less in rent than you would pay in interest on a mortgage, then, assuming house prices are neutral (not going up or down), you're better off financially renting than buying. It's just simple maths. With todays house prices, for most people this is the case.

    This "rent is dead money" ****e is one of those Irish sayings that has young people scrambling to sacrifice their quality of life on the alter of house ownership. It's all a big lie, easier to trot out a pithy saying than to actually think about the sums involved.

    Now if you're like culchie and believe that markets can only go up (no comment), then you're better off buying of course.


  • Registered Users Posts: 5,047 ✭✭✭Culchie


    hmmm wrote:

    Now if you're like culchie and believe that markets can only go up (no comment), then you're better off buying of course.

    In the long term yes, prices will only go up and then up and up some more.

    If you are buying today, with the idea of liquidising your asset next week or even next year, then you do your sums, as you will have legal costs etc....

    However, if you are buying a home, and therefore a long term investment, are you seriously trying to tell me that property prices will be lower in 10 years time? ...whilst oil, drink, food, and more importantly wages/salries keep going up?

    If so, please back it up with some historical evidence.
    Pick any year you want, go back ten years, and post the comparisons here.

    Do not confuse your argument about quality of life and cashflow with that of the economics of this thread.

    I'm not saying that the situation is right....but that's the way it is.


  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    Culchie wrote:
    Wow ...and I mean Wow.

    I didn't realise the figures were so scary now. My mortgage is less than €380 on my rental property.

    Fair play, you seem to be on top of situation.

    Aren't you still going to habve to pay interest though when you eventually take out the loan....so is it a saving or a deferral?


    cheers!

    If I could get a mortgage that only cost me €380 a month I'd be out there buying a place like a shot!!!! unfortunatly I came to the game too late! damn my youth!

    I am deferring the loan in the hope that the loan amount will be less and thus less interest will have to be paid in 5 years time. Also I can be saving the amount I'd have paid off the principle so I'll still own €20,000 (be it in cash or in house) after 5 years is my thinking. Either way I'll have to pay big interest so I'm just trying to set myself up to pay the less interest option.


  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    Culchie wrote:
    In the long term yes, prices will only go up and then up and up some more.

    If you are buying today, with the idea of liquidising your asset next week or even next year, then you do your sums, as you will have legal costs etc....

    However, if you are buying a home, and therefore a long term investment, are you seriously trying to tell me that property prices will be lower in 10 years time? ...whilst oil, drink, food, and more importantly wages/salries keep going up?

    If so, please back it up with some historical evidence.
    Pick any year you want, go back ten years, and post the comparisons here.

    Do not confuse your argument about quality of life and cashflow with that of the economics of this thread.

    I'm not saying that the situation is right....but that's the way it is.

    I agree that 10 years from now house prices will be the same or higher than today (unless something drastic happens)

    that being said I think in the next 10 years we will see a dip in house prices that should allow me to pick one up for less that they cost today. I'm just hoping I can pick up a bargin in the next 5 years.

    J


  • Closed Accounts Posts: 3,031 ✭✭✭MorningStar


    whizzbang wrote:
    1) Prices will need to come down before those people can afford to buy. That being said, it will help stablise the market. So long as people are willing to buy houses when they see prices are going down.
    I was just pointing out things weren't as simple as you said. THe demographic changes are a lot more complex than either of us stated. One thing for sure based on the changes dues to imigration and a larger number of single people there will probably be more rental property required.
    whizzbang wrote:
    3) Got the 30% from the Gunne report a while back, it might have been 35% We used to have the highest ownership, but it has gone down a lot. Transient people can help support rents but Dublin rents are still falling even with our 145,000 new Eastern European friends... I believe there are just too many places on the market and too few renters. I rented a place just last month and haggled the price down by €150/month as it had not been rented in 2 months. (found 2 month old Chicken Kiev in Freezer!;) ) It seems 6 weeks is an average down time between lettings these days and I have a number of friends who have haggled their rents down due to the ease of renting!
    Never trust the estate agents figures or their own. They have a vested interested. You may feel there are too many properties renting bu that is an assumption drawn from anicdotal evidence which isn't defintely wrong or right but I wouldn't trust my future on it. I would say the same information is based on the property viewed, type of tenant wante, type of landlord at that level. Lots of unknown factors that you may be missing.
    whizzbang wrote:
    4) Thats why I said "are approaching the top of the pile ", if our debt growth stablised now we could have a managable amount of debt, the problem is with the ease of credit we are surging ahead into unsustainable debt levels.
    I am no financial expert but the credit competition coming into Ireland is good AFAIK. You also have to look at the demographics of who is getting into debit and who is saving. THe SSIA were mostely taken up by the middle classes yet the lower classes are getting into more debit. That could mean in the future that the poor get poorer and the rich get richer even if it doesn't stay stable it doesn't mean everybody sufers. THe UK is great for such figures as they tend to be 10-15 years ahead. Look after your own finances and try to make sure the stupid don't get to be too stupid but don't expect personal debit to kill the economy. I don't know of a country where it has happened.
    whizzbang wrote:
    The only reason this makes sense is that I believe that 5 years time house prices will be less than now. So I am effectivly paying €34,500 to put off making the decision so I can see if I'm right.

    NIce theory but nobody can say for sure if it is right or wrong. If house prices rise above €20k in that time you may loose. Many think, including myself, that the SSIAs will make house prices rise over the next 2 years. 100% may do the same. Either way €20k over 25 years isn't a huge saving when you bear in mind inflation. I know when some peoples' mortgages were towards the end the mortgage payments were less than a pack of fags.
    whizzbang wrote:
    I'm not trying to scare anyone, I'm just seeing what answers people have to my worries! ;)

    You aren't scarying me but it doesn't sound like you have really researched it all. It's all a big decission and sounds like going back to the basic before reading press and surveys maybe the best approach. Your math is correct but doesn't seem to connect to the reality of time and unknowns. Your biggest leap of faith is prices will not rise in the next 5 years. Not saying the will one way or the other but to run the risk for such a small amount of money in the big scheme of things is a risk.


  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    I was just pointing out things weren't as simple as you said. THe demographic changes are a lot more complex than either of us stated. One thing for sure based on the changes dues to imigration and a larger number of single people there will probably be more rental property required.

    Never trust the estate agents figures or their own. They have a vested interested. You may feel there are too many properties renting bu that is an assumption drawn from anicdotal evidence which isn't defintely wrong or right but I wouldn't trust my future on it. I would say the same information is based on the property viewed, type of tenant wante, type of landlord at that level. Lots of unknown factors that you may be missing.

    I am no financial expert but the credit competition coming into Ireland is good AFAIK. You also have to look at the demographics of who is getting into debit and who is saving. THe SSIA were mostely taken up by the middle classes yet the lower classes are getting into more debit. That could mean in the future that the poor get poorer and the rich get richer even if it doesn't stay stable it doesn't mean everybody sufers. THe UK is great for such figures as they tend to be 10-15 years ahead. Look after your own finances and try to make sure the stupid don't get to be too stupid but don't expect personal debit to kill the economy. I don't know of a country where it has happened.


    NIce theory but nobody can say for sure if it is right or wrong. If house prices rise above €20k in that time you may loose. Many think, including myself, that the SSIAs will make house prices rise over the next 2 years. 100% may do the same. Either way €20k over 25 years isn't a huge saving when you bear in mind inflation. I know when some peoples' mortgages were towards the end the mortgage payments were less than a pack of fags.


    You aren't scarying me but it doesn't sound like you have really researched it all. It's all a big decission and sounds like going back to the basic before reading press and surveys maybe the best approach. Your math is correct but doesn't seem to connect to the reality of time and unknowns. Your biggest leap of faith is prices will not rise in the next 5 years. Not saying the will one way or the other but to run the risk for such a small amount of money in the big scheme of things is a risk.


    Cheers for the reply MonrningStar, you make a lot of good points.
    My only real disagreements are as follows:
    1. SSIAs, I think people are over stating how much of an effect these will have on the property market. I think the average payout will be about €12K, so even if you have two people together that will not go far towards a €350,000 house! it might cover stamp duty and leval fees and the bus home ;)

    2. By my calculation I save €20k if the house prices stay the same, I wouldn't bother waiting if I thought that was all I would save. In reality I think prices will drop so I could end up saving a lot more! I'm really going to make my decision over the next year or so. The prices seem to be leveling off at the moment so it would be a bit silly of me not to wait to see if they manage to stay level or start to decline.

    J


  • Registered Users Posts: 9,555 ✭✭✭DublinWriter


    whizzbang wrote:
    The only reason this makes sense is that I believe that 5 years time house prices will be less than now.
    ...and there's the essential flaw in your plan.

    No offense to you dude, but that's a real 'head in the sand' attitude.

    The first flaw in your arguement is that the cost of property, in the long economic term, only goes in one direction - up.

    If you think the same apartment will cost you the exact same in five years time then you're out of your mind.

    I'll bet you anything that the apt that cost you 400,000 today will cost you 600,000 in 2010.

    The second flaw in your arguement is that you're assuming that interest rates will stay at their current historic low over the next five years. Oil prices hit an all time high today and the trend looks like it will continue, driving up inflation and interest rates in the long term.

    There's only been one good time to buy property and that time is now.


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  • Registered Users Posts: 1,366 ✭✭✭whizzbang


    ...and there's the essential flaw in your plan.

    No offense to you dude, but that's a real 'head in the sand' attitude.

    The cost of property, in the long economic term, only goes in one direction - up.

    Buy now.

    I think we will have to agree to differ! I'm afraid I'm in no hurry to buy a house, who know maybe I'll never buy, who says you have to own a house anyway?!

    ;)


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