Won't ever own a house !!

Sarn

I have currently given up looking (and I was only looking for a 1 bed apartment). The amount of debt I would be in for a property that I would only be buying out of desperation (and stretching myself for), coupled with a massive decrease in my quality of life has made me decide that renting is the option for the short term.

With interest rates set to rise by .25 or .5% next week and further hikes on the way, renting in a great location for a lot less appeals to me more. Recent investors who aren't covering their repayments with rent and find themselves having to cover it more and more themselves are going to start finding it tough.

Basically I'm taking a wait and see attitude, yes, I know there are people who have been waiting for years for things to turn around. But the recent past has had historically low interest rates which are currently changing. Ultimately I'd rather a reasonable quality of life over a shoebox/massive commute without the fear of worrying about making my next mortgage repayment.

hmmm

DublinWriter wrote:

Crash or no crash, anything you buy now will be worth seriously more in 25/30 years time.Bottom line: you never lose money on bricks and mortar in the long run.

Because of inflation you will never lose nominal money on anything over 25/30 years, all you can do is compare returns on investment types over that period. In the past 25/30 years, the return on equities has exceeded the return on property. I appreciate you are perhaps one of these new breed of property investors who believe that what we have seen over the past 5 years will continue indefinately, if so good luck to you.

Also, I'm afraid you are mixing up your ERM history with the UK house price crash of the 1990s. Please try and do some basic research before you start trying to patronise people.

DublinWriter

hmmm wrote:

Because of inflation you will never lose nominal money on anything over 25/30 years,

Wrong. Worse case scenario is that property prices just *match* inflation.

Go look at property prices 25/30 years ago and see what you could have won.

Go find me an equity that would have matched that growth and I'll get you a Blue Peter badge.

hmmm wrote:

Also, I'm afraid you are mixing up your ERM history with the UK house price crash of the 1990s. Please try and do some basic research before you start trying to patronise people.

Yawn. Google it yourself. Geroge Soros dumps huges amounts of Sterling on the International Currency markets in a 24 hour period....Sterling gets devalued.....LaMont has to put up interest rates 4 times in one day to keep Sterling in the ECU band....as he said himself, it was a 'Blip', but a blip that knocked many mortage owners right out of the market in the short term...and the long term effect was that property in London has suddenly became so affordable these days!...........not.

Unfortunately, a lot of people are waiting for the same 'blip' here in Ireland these days.

Dream on.

Lex Luthor

hmmm wrote:

As we are heading into the inevitable house price fall

I hardly think so....maybe a slow down...people feeling a bit in the pocket from interest rate hikes, but they thought the recent rate hikes would slow things down and it hasn't, so it will take interest rates to hit 7-8% maybe more before house prices will get hit

The_Conductor

DublinWriter wrote:

Wrong. Worse case scenario is that property prices just *match* inflation.

Go look at property prices 25/30 years ago and see what you could have won.

Go find me an equity that would have matched that growth and I'll get you a Blue Peter badge.

An equity that not only matched that growth, but over doubled it and is still ontrack for a 7.5-8% return on CAR increases of 2% over the next 10 years is forestry. Over the last 200 years forestry has returned an average of 5% over the rate of inflation in the northern hemisphere. There are equities out there that do consistently achieve..... Better get battering away there on the Blue Peter badge..... I have to admit an interest in forestry- I did my undergrad degree in it 10 years ago.

DublinWriter wrote:

hmmm wrote:

As we are heading into the inevitable house price fall
Says who exactly?

That would be the OECD. We are currently considered the third most likely market in the world for property to collapse (Denmark is considered 100% likely to collapse- we will not be in a similar position unless interest rates rise by 1%, a not unrealistic expectation). The OECD published an exhaustive report on this about 10 days ago. I will try to find a link to it for you.

hmmm wrote:

Because of inflation you will never lose nominal money on anything over 25/30 years, all you can do is compare returns on investment types over that period. In the past 25/30 years, the return on equities has exceeded the return on property. I appreciate you are perhaps one of these new breed of property investors who believe that what we have seen over the past 5 years will continue indefinately, if so good luck to you.

In most cases true, but not always. There are a number of markets which have suffered from massive deflationary pressures, particularly over the last 15 years. The obvious candidate for this is Japan. Real asset prices dropped by over 90% in places. Consumption collapsed- why would people buy property or indeed any consumer goods, when it would cost so much less in the very near future. This did have a few unintended consequences- including the spawning of the Freecycle movement. Government initiatives to inject massive amounts of liquidity into the market had worse than zero effect- they simply substituted local products for imports, raising unemployment levels, and further depressing the local market.

Lex Luthor wrote:

I hardly think so....maybe a slow down...people feeling a bit in the pocket from interest rate hikes, but they thought the recent rate hikes would slow things down and it hasn't, so it will take interest rates to hit 7-8% maybe more before house prices will get hit

Once again- according to the OECD, the tipping point for the Irish housing market is considered to be one ECB percentage point rise above current levels. This is now expected to be reached possibly by the end of the year or early next spring. This translates into mortgage interest rates of about
4.25-4.5%, not 7 or 8%. Time will tell of course.

With interest rates set to rise by .25 or .5% next week and further hikes on the way, renting in a great location for a lot less appeals to me more. Recent investors who aren't covering their repayments with rent and find themselves having to cover it more and more themselves are going to start finding it tough.

Sarn wrote:

Basically I'm taking a wait and see attitude, yes, I know there are people who have been waiting for years for things to turn around. But the recent past has had historically low interest rates which are currently changing. Ultimately I'd rather a reasonable quality of life over a shoebox/massive commute without the fear of worrying about making my next mortgage repayment.

It is now fundamentally cheaper to rent than to buy. My mortgage is not excessive, but the interest component of it is now about 20% greater than the rental income potential (next door, an identical property is rented out- it was bought 2 years ago, and the landlord is not meeting his mortgage payments by over 250 a month). If I rented I would have perhaps 500 Euro a month in higher disposable income than I have at present. The AIB advertisements for 100% mortgages with the byline "Yes, you can have a mortgage and a life......" are plain crazy. There is no such thing as money for nothing. Why do people not get this into their heads.

I give up.

Ps- SSIA is not money for nothing. Its bribery by the government to try and ingratiate themselves with the electorate and distract us from their incompetence. Its not free money either- its tax payers money- that is money from you and me. The government does not give us anything- it takes money from us and decides how to distribute it. Nothing is free, ever.

FillSpectre

Smccarick

OCEB have been continuely wrong on the subject so becasue they say it doesn't make it happen. It is speculation that they do get wrong. I do think a change is likely but of the people to trust they don't have my faith. THe focus of the change on price alone is flawed IMHO.

There are more adults living at home now AFAIK. I think that is a reserve likely to keep prices from plumeting. Loads of people are waiting for a turn so they can buy. Do you know any adults living with their parents who don't want to buy a place of their own?

SSIAs were an investment scheme funded by the government. Anything you are stating about it is your personal political view. I know nobody who is saying they will vote them back in becasue of SSIAs. For it to be bribery people will have to do something for it, as I have an SSIA and don't plan to vote them back in it isn't a bribe.

whizzbang

FillSpectre wrote:

There are more adults living at home now AFAIK. I think that is a reserve likely to keep prices from plumeting. Loads of people are waiting for a turn so they can buy. Do you know any adults living with their parents who don't want to buy a place of their own?

I know a few, they cant afford them, if prices were to level off they still couldn't afford them, if prices went down to were they coudl afford them they would wait a bit longer to see if they could get one even cheaper.

I find it hard to believe many people would buy property in a falling market if all the odds were that the price would be significantly cheaper in a year. No matter how sick they living at home they were.

DublinWriter

It is now fundamentally cheaper to rent than to buy.

Yes, but after 25 years of renting you have what exactly?

whizzbang

DublinWriter wrote:

Yes, but after 25 years of renting you have what exactly?

you have had a higher standard of living and possibly multiple opportunities to buy property after a reduction in house prices

The_Conductor

FillSpectre wrote:

Smccarick

OCEB have been continuely wrong on the subject so becasue they say it doesn't make it happen. It is speculation that they do get wrong. I do think a change is likely but of the people to trust they don't have my faith. THe focus of the change on price alone is flawed IMHO.

There are more adults living at home now AFAIK. I think that is a reserve likely to keep prices from plumeting. Loads of people are waiting for a turn so they can buy. Do you know any adults living with their parents who don't want to buy a place of their own?

SSIAs were an investment scheme funded by the government. Anything you are stating about it is your personal political view. I know nobody who is saying they will vote them back in becasue of SSIAs. For it to be bribery people will have to do something for it, as I have an SSIA and don't plan to vote them back in it isn't a bribe.

I know of a lot of adults living at home, certainly. In a lot of cases its a lifestyle choice though- who wouldn't live at home if they could get away without paying a mortgage, having hot meals as required, laundry service etc The only thing they don't have is the privacy of their own property (in so far as privacy exists these days). While Price is a factor- the whole convenience thing is massive too. Parents are worse for letting kids get away with it. I know of one person who is on a salary of over 70k and in his late 30s still living at home because it suits him.

Certainly the OECD have been wrong about many things in the past. The fact that they are part of a cacophony on voices all shrilling the same thing is irrelevant too. What they are saying is from an affordability perspective the average couple will not be able to service the average mortgage on the average house if interest rates go up 1%. This is worrying. Even if it does not immediately impact on house prices, it will on mortgage defaults and repossessions- a slippery slope. This is of course speculation. I'd be more than happy to sit down over a beer in say 2 years time and see what time tells us.

SSIAs were/are an investment scheme funded by the taxpayer. The government funds nothing. The government spends taxpayers money as it sees fit. The idea behind the scheme was to take money out of the economy to prevent it overheating (inflation was in the region of 4% at the time if my memory serves me right and with negative returns on equity in the banks (interest rates below the rate of inflation) no-one was interested in saving. They worked to a certain extent- however we now have inflation rates of 3.6% and those are expected to rise to possibly 4.5% by summer '07. So- in essence they moved the problem into the future rather than dealing with it in the present. Vis-a-vis it being a bribe- it has been described by Bertie as a mechanism to improve consumer confidence going into an election. That in my eyes is an admission of it being at very least a type of bribe- an attempt to influence the public by shovelling money at them (the fact that it is their own money- money collected through higher stealth taxes, seems to have gotten lost in the static somewhere).

Officially I am not allowed to have a political opinion. I too have an SSIA, and I too will not be voting for the current incumbents (on an number of grounds)- so I have not been bribed, akin to yourself. Unfortunately we are not the general public. If we were told the scheme would be renewed for another 5 years if the government was re-elected- hell, that would probably decide it for most of the country (but for the fact that they seem incapable of following through on election manifestos.....)

We have an interesting time ahead of us. It would be good to look back in 2 or 3 years time and see what comes to pass.

DublinWriter

whizzbang wrote:

after a reduction in house prices

Keep dreaming.

whizzbang

DublinWriter wrote:

Keep dreaming.

I will do, in my lovely rented appartment that costs far less to rent than it would be to buy

DublinWriter

whizzbang wrote:

I will do, in my lovely rented appartment that costs far less to rent than it would be to buy

Only in the short term.

Personally, I rather be paying my own mortgage than someone elses.

whizzbang

DublinWriter wrote:

Only in the short term.

Personally, I rather be paying my own mortgage than someone elses.

I've no problem paying for a service while reducing my person risk.

If you rather expose yourself to an over heating property market, be my guest.

The_Conductor

DublinWriter wrote:

Only in the short term.

Personally, I rather be paying my own mortgage than someone elses.

If you are not even covering the interest component of what a 100% mortgage on the property would cost, you are automatically better off renting than buying (particularly if asset price increases look extremely uncertain).

We have this preoccupation with owning property here in this country- renting is seen as a dirty word, as money wasted.

The economic rent on a property may well be far higher than the actual rent you are paying- which means the rent foregone is a cost to the landlord which is not being met.

Just because you are renting property does not make you a bad person - it can a legitimate economic choice I'd be thrilled to have a couple of hundred extra a month in disposable income and still get to live in a nice house. At the end of the day the government are probably going to find someway to tax any goodness out of my property anyway.....

FillSpectre

smccarrick wrote:

I know of a lot of adults living at home, certainly. In a lot of cases its a lifestyle choice though- who wouldn't live at home if they could get away without paying a mortgage, etc...

Not my expereince, no adult I know wants to be at home with their parents. Maybe the younger generation below their 30s is making this choice but then who is complaining about not being able to afford a place???;)

smccarrick wrote:

Certainly the OECD have been wrong about many things in the past. The fact that they are part of a cacophony on voices all shrilling the same thing is irrelevant too. etc...

For over 5 years thay have been specifically wrong about house prices under all the diffenerent "reasons" for the change to happen. They will eventually be right but that is just playing the law of ineveitablity where something will change.

smccarrick wrote:

Officially I am not allowed to have a political opinion.

smccarrick wrote:

but for the fact that they seem incapable of following through on election manifestos.....)

Well maybe you should stop expressing one then. You are completely bias in what you just said. THe governemnt could have been right to pospone inflation. It may instill saving in people and you don't know it will increase inflation.

smccarrick wrote:

I too have an SSIA, and I too will not be voting for the current incumbents (on an number of grounds)- so I have not been bribed, akin to yourself.

Well I like your mind reading ability to know that everybody else has been bribed.


Seriously stop going off on political rants in the place you are a mod. It is irritating and your postition does not give you the right to use this as a soap box.

jdivision

MarinoMark wrote:

Just listened to news at one, house prices have shot up quicker this Quarter then any time in the last 6 years. by the years end average gaff in Dublin will be 400k. Fcuk that ,Rent forever, have been saving and saving, its like being up the mountains, seeing the top, getting there, and seeing another higher mountain just as you reach the peak !! Thinking of (A)...handing in my notice and emigrate with my 35k savings.....(B)..Buy a nice car, and start going out again...my sex life might improve...(C)..keep saving and hope prices will drop.....oh look.... a flying pig !....(A) is favorite at the moment.....:(

Why don't you buy via the affordable housing scheme. Income limit in Dublin City Council area is e52,000, there's no limit in Dun Laoghaire Rathdown as such but list is currently closed, SDCC limit is e40k and Fingal's is e40k. I got mine at a discount of e65k and couldn't be happier.

empirix

OP: Take option 1 dude, emigrate, i am just back from OZa nd tbh i made a big mistake coming back, if you have a decent work backround etc, you'll land a decent job in OZ and everything is more or less half price, a motor that costs €30,000 over here will be the equivalent there but in AU$, that is a huge saving, same with houses, except of course uyour looking to buy in a top notch area, then its top dollar, yes its a long way from home, yes you will miss some things, but hey the weather better, theres more to do, you'll have a better standard of life and theres always plenty of Irish clubs/pubs to go if your feeling hoime sick, the only thing you'll really miss is family and friends, but hey sacrifices have to be made and many a man has made such sacrifices to find a better life. Also as some posters think here, in OZ(and everywhere else) your dating/sex life doesn't stop if you are over 30.
Another side note: there are some seriously hot babes in OZ(just a side note but a good one)

I am just taking OZ as an example cause i have lives there, i am sure other counties such as the States etc are the same, Ireland has gone crazy(financially) and thats a fact, i am currently in the process of applying for a migration visa and hope to be out of here after Xmas, travelling back and forth out to Navan every day in the pissings of rain/dreary weather and getting ripped off in pubs/clubs/supermarkets etc is not my idea of a good life. I will miss the Irish sense of humour though as i do firmly believe we are right up there as a great people with a great sense of humour and just damn right helpful and great, did i mention great

DublinWriter

whizzbang wrote:

If you rather expose yourself to an over heating property market, be my guest.

Even if there is a crash in the next few years (which I don't think will be the case), are you seriously trying to tell me that you'd eventually lose money in 25 years time?

The case of the UK proves this.

empirix

excuse the spelling!

whizzbang

DublinWriter wrote:

Even if there is a crash in the next few years (which I don't think will be the case), are you seriously trying to tell me that you'd eventually lose money in 25 years time?

The case of the UK proves this.

I'm saying by renting now I can buy in the slump. I do intend to buy a house in the next 25 years. I think most people who are renting do. Just not in this mad market.

ressem

Are there any figures on how much property is unoccupied/ unrented?

Anecdotal talk from one census worker in Dublin described unbelievably high numbers of houses with no occupants,
and I do see regions of new developments on the ways to work that have 'for sale' signs being swapped every few months, over two years, on the same houses with no window blinds fitted.

It would appear that in these cases, the investors are paying more for the houses than occupiers are willing to pay, and see rental income as being too much hassle.
So if property increases fall to inflation levels, will these properties be sold at prices that occupiers are willing to pay, or made available for renting?

FillSpectre

whizzbang wrote:

I will do, in my lovely rented appartment that costs far less to rent than it would be to buy

In 5 years we'll see how you feel. I have yet to see rents drop in the long term.

smccarrick wrote:

If you are not even covering the interest component of what a 100% mortgage on the property would cost, you are automatically better off renting than buying (particularly if asset price increases look extremely uncertain).

Think long term for a moment and that doesn't come true. Renting does restrict other aspects of life. You don't own furniture, appliance or get to decorate in most places. No pets, no garden to play around with. THere are lots of home owning aspects that people love and hate that should be considered.

I do know my granny couldn't afford to rent or my mother. You see mortgages tend to go down and rent tend to stay with inflation. THere are excveptions and 100% mortgages and all that but stop taking extremes and look at the reality.

If you plan to rent foever what is the plan for later? One person claimed to have lots of money invested but most peolpe can't pay rent save for a living pension and another pension for rent so what is the plan?

Saruman

FillSpectre wrote:

Sod work how about stuff to do, friends, family and hospitals. Buy a 3 bed house far out and have a sick kid and see what your hour drive feels like when you are trying to get to a hospital.

Eh.. what? Dublin is not the only place to have hospitals :rolleyes:

Mullingar is 10 mins away.. do you live 10 mins from a hospital in Dublin?

Kinetic^

Rent is a waste of money if you can afford to buy. You're paying someone else's mortgage when you could be paying your own.

FillSpectre

whizzbang wrote:

I'm saying by renting now I can buy in the slump. I do intend to buy a house in the next 25 years. I think most people who are renting do. Just not in this mad market.

You are hoping for a slump to do this which is quite obvious from your posts. Instead of seeing what is the best reality for you you have decided to gamble on this happening. It is your choice but the point is you dismiss vother views becasue you don't want to hear them rather than logic and information.

You know the old joke about a guy in a flood waiting for God to save him so he refuses a boat,helicoptor and submarine. When he drowns and gets to heaven he says to God "You were meant to save me what happened?"
God "I don't know I sent a boat, a helicopter and a submarine":D

Out of curiosity when could you have bought and how much would that property be worth now?

whizzbang

FillSpectre wrote:

Out of curiosity when could you have bought and how much would that property be worth now?

I could never have bought anywhere I was willing to live, I am a relativly recent graduate and my earnings have never been enough to buy a reasonable place.
I have standards and I'm willing to spend money to stick to them.

This is the sort of luxury I could afford if I were to buy now in Dublin

http://www3.myhome.ie/search/property.asp?id=271314&np=&rt=search&searchlist=

FillSpectre

Saruman wrote:

Eh.. what? Dublin is not the only place to have hospitals :rolleyes:

Mullingar is 10 mins away.. do you live 10 mins from a hospital in Dublin?

You are right all the best hospitals are outside of Dublin and they don't transfer people to Dublin for better care. :rolleyes:
I already answered this so you can read the answer earlier.

incisor71

I do wonder how many of these "renting is dead money" quotations come from people who have forgotten that the only reason they can afford to buy because they happen to be one half of a couple, married or social?

Don't get me wrong, I would like to own property, at least to have one stable geographical location from which to operate, and to be able to control who goes past the front door. In theory I could come up with the a mortgage for the iconic 3-bedroom semi, but then I'd have to forget about (a) having a car, (b) feeding myself properly, (c) being able to afford access to any services beyond electricity and water, and (d) going out or enjoying myself any more than, oh, four times a year.

One has to choose the battles, and for now I'm going with my (a)-(d) battle above.

{Edit: another point, often forgotten, is the dependency on living within accessible distance of employment - unless you enjoy a 1.5 hour commute each way to work!}

FillSpectre

whizzbang wrote:

I could never have bought anywhere I was willing to live, I am a relativly recent graduate and my earnings have never been enough to buy a reasonable place.
I have standards and I'm willing to spend money to stick to them.

This is the sort of luxury I could afford if I were to buy now in Dublin

http://www3.myhome.ie/search/property.asp?id=271314&np=&rt=search&searchlist=

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