Affordable 2 bed - to buy or not?

debs1977

Hi all,

Having been on the South Dublin Co Co Affordable list for nearly two years was offered a two bed apartment in St Edmunds, Palmerstown for 240k. Market value is reputed to be well over 300k. Have yet to agree MV with council.

Put down refundable deposit.

69 sq.m, two beds, ground floor, 24 hour security, own parking space

These are slightly more expensive than previous affordable developments - from what i hear they separated the list into higher and lower earners. I don't mind been offered the better quality development as could not see myself living in some of the other developments.

Although the location has it's good and bad points it is close to everywhere I know and the apartment itself is a lovely starter home.

First Active mortgage repayments just over €900 a month. Have the option of renting a room for up to €800 a month tax free

I know prices are continually falling and it's a really bad time to buy on the open market but am debating whether they will actually fall to the just under 100k point

South Dublin absorb negative equity and the clawback seems to be based on the market value at the time of sale

Is this a good deal?? I'm in two minds, don't want to jump into something I may live to regret

Sorry for length of post - any advice greatly appreciated!!!

tHE vAGGABOND

Ground floor apartments make baby jesus cry

SkepticOne

debs1977 wrote: »

First Active mortgage repayments just over €900 a month. Have the option of renting a room for up to €800 a month tax free

Realistically you won't get 800.

240K is only 20% below market price (assuming it is a genuine market price). I would really be looking for a bit more of a discount than this to be honest.

debs1977

SkepticOne wrote: »

Realistically you won't get 800.

240K is only 20% below market price (assuming it is a genuine market price). I would really be looking for a bit more of a discount than this to be honest.

Thanks, I agree - I wouldn't expect to get more than 600 for renting a room. Ideally I'd like not to have to rent a room - unless circumstances change I won't.

It does give options though that add to the pro side of signing the contract

I would say the quoted market value is closer to 310 to 320k giving a discount of 30%. I'd say the EA are dropping prices with a bit of haggling by 5%

Clink

If you're happy with the apartment and can picture yourself living there for a good few years I'd go for it. You can't end up in a negative equity situation so what do you have to loose?

SimpleSam06

debs1977 wrote: »

69 sq.m, two beds

You are thinking about paying two hundred and forty thousand euros for sixty nine square meters of a ground floor apartment in Palmerstown? Thats a little under three and a half grand per square meter. I would seriously wait a couple of years and see what the prices are like then, the way the winds are blowing you will save yourself six figures over the lifetime of the mortgage. As someone recently said, affordable doesn't mean good value.

How Strange

SkepticOne wrote: »

Realistically you won't get 800.

240K is only 20% below market price (assuming it is a genuine market price). I would really be looking for a bit more of a discount than this to be honest.

OP, I'm familiar with the area too and there is going to be a glut of apartments around there soon as that big development in the old football grounds beside Liffey Valley Fitness too. I'd try to haggle the price of the apartment closer to €220k. I live close by and the value of our apartments have plummented in the last 6 months. At the dizzy height of the 'boom' they were valued at €300-320k (don't know if they ever sold for that) but now we'd be lucky to get €240k.

debs1977

SimpleSam06 wrote: »

You are thinking about paying two hundred and forty thousand euros for sixty nine square meters of a ground floor apartment in Palmerstown? Thats a little under three and a half grand per square meter. I would seriously wait a couple of years and see what the prices are like then, the way the winds are blowing you will save yourself six figures over the lifetime of the mortgage. As someone recently said, affordable doesn't mean good value.

Just got the valuation from South Dublin and the bank.

South Dublin 315k
Bank 320k (would have thought bank not going to over value as i'm only borrowing 225k anyway)

So discount going on bank value of 25%, with clawback of 23%. If value decreases just means I have to pay council less. I can't loose money - if they are only valued at 240k five years from now, clawback is 0%.

I do think they are of a better quality to some of the apartments out there that are dropping in value - they seem to be holding their value well

Big issue for me now is the ground floor aspect. The 24 hour security helps and there is a nice bit of greenery separating the path/road from the windows, but will have to go back and view a few more times to see if I can see myself living there.

Thanks for all the advice, such a headreck - big decision!!

SimpleSam06

debs1977 wrote: »

I can't loose money - if they are only valued at 240k five years from now, clawback is 0%.

Thats assuming you can sell it at all in five years. I think a lot of people in this country will have "I can't lose money" as their famous last words... In any case I thought clawback was based on the price you paid for it, not current market values, but I may be mistaken in this. Clawback definetely applies only if you want to sell up early.

confuzed

Simple thing as said earlier. Think about your future plans. If your life is bit settled, your job is bit settled go for it. you are right about lovely location and nice apartment but at the end of the day, space does matter. A friend of mine has 2 bed apartment with 2 toilets (one main and one en suit) and you know what, he is using en suit for keeping his daughters dolls and bicycles .

What makes me sick here is too much talk about wooden flooring, shaker style kitchen, tiled bathroom and when it comes to space, its merely 69m2.

You won't loose money by falling prices but you lost your FTB virginity and tax relief countdown (total 7 yrs) starts the moment you buy house.

Good luck with your house.

The_Conductor

If it suits you as a long term residence- buy it, if it doesn't don't. As per other comments here- there is already a glut of apartments in the greater Palmerston/Lucan area (it recently took over a year to sell one on Main Street Lucan Village- which would be considerably more prestigious than St. Edmunds, particularly given the drug rehab centre built on the triangle of land opposite the entrance of the estate link here. It also has a halting site on one side of the site (note: I have nothing against halting sites per se, but they have regular bonfires there with car waste which produces dense smoke and its quite annoying).

Rooms do not rent for EUR800 a month in the area- they go for 500-550 including bills (or 400-450 + bills). A two bed apartment will rent for 1100-1200 (depending on features and location)- there are loads of them on Daft in the area.

AIB and BOI increased their rates yesterday, and First Active is expected to do so next week. NIB have the best rates at present- if you can get them. Personally I think that the valuation you have been quoted is a bit OTT- if you check on this forum you will find quite a few people who have managed to get sizeable discounts from the developer in the estate......

subway

your buying an affordable house.
it has been valued at boom time market value (320k)
a person who lives in the area values their house at 240k
You are paying 240k for the house under the AHS.

why not just buy it on your own? (ie, not through AHS)

The_Conductor

subway wrote:

your buying an affordable house.
it has been valued at boom time market value (320k)
a person who lives in the area values their house at 240k
You are paying 240k for the house under the AHS.

why not just buy it on your own? (ie, not through AHS)

Very true.
Have a look at DAFT and at estate agents in the area.
320k will now get you a 3 bed semi-detached house in the general area, in a nice enough estate- examples here, here (with planning permission for a 1,100 sq. foot extension) and here.

Just down the road in Palmerston itself you can have a 2 bed house with a very large garden for 315 link here......

Seriously- look around. The 240k you are being quoted is not even a reasonable measure of the open market price, never mind an AH pricetag......

The one big thing St.Eds has in its favour is the proposed route of the new Luas line (which I understand may be delayed or even put on hold, because of the current government cash problems). Personally I feel a far proposition would be to buy a house in the area under the shared ownership scheme- if you contact the council they might be in a position to discuss it with you.

Make sure you fully check out what your options are- just because its on the AH scheme does not necessarily mean its suitable for you, or indeed that its good value.........

How Strange

smccarrick wrote: »

Seriously- look around. The 240k you are being quoted is not even a reasonable measure of the open market price, never mind an AH pricetag......
Personally I feel a far proposition would be to buy a house in the area under the shared ownership scheme- if you contact the council they might be in a position to discuss it with you.

This is very good advice. The shared ownership scheme is now a realistic option again now that prices are falling and there's no clawback etc for buying DCC out.

debs1977

smccarrick wrote: »

Very true.
Have a look at DAFT and at estate agents in the area.
320k will now get you a 3 bed semi-detached house in the general area, in a nice enough estate- examples here, here (with planning permission for a 1,100 sq. foot extension) and here.

Just down the road in Palmerston itself you can have a 2 bed house with a very large garden for 315 link here......

Seriously- look around. The 240k you are being quoted is not even a reasonable measure of the open market price, never mind an AH pricetag......

The one big thing St.Eds has in its favour is the proposed route of the new Luas line (which I understand may be delayed or even put on hold, because of the current government cash problems). Personally I feel a far proposition would be to buy a house in the area under the shared ownership scheme- if you contact the council they might be in a position to discuss it with you.

Make sure you fully check out what your options are- just because its on the AH scheme does not necessarily mean its suitable for you, or indeed that its good value.........

Thanks smccarrick..helpful advice. I am actually perfectly happy to live in an apartment for the foreseeable though...I'm reasonably young and don't see myself having kids for a while yet. A two bed apt is more than enough space for me on my own...would be lost in a house.

I know 240k is a little on the steep side for affordable but I think the price is reflected in the quality, lower price and the clawback % increases anyway. 240k is the max I would borrow at this moment in time. An extra 100k for a house in an area that may not be in a great area is not something that I could afford or appeals.

On the price comparison issue raised on equivalent non affordable properties - I have done so much research and have yet to see anything that comes close. For 240k I can get a one bedroom (no potential rental income/harder to sell/less space) in an area that is either (a) in the middle of nowhere (b) in a dodgy area or (c) looks like a gust of wind might blow it down. I have checked all properties of a similar quality, with ok location and have yet to see anything for less than 310k

I had been worried as to whether I'd see myself living in it for a longtime - went back at the weekend and am delighted to say it made my mind up for me:)

For a groundfloor apt all that can be seen is greenery, main exit does not pass by mine, and there is no reason for anyone to pass by my window...no walkway etc. Can barely see in from the outside and can't hear a thing. Also there are no apartments facing mine and only two others on my floor.

It actually feels a good distance away from the Neilstown area as well, and with the security it's not a worry for me. Hopefully the Luas stop happens sooner, rather than later.

The_Conductor

Have you checked the shared ownership scheme?
Also- as alluded to above, many people have successfully gotten the prices of units reduced in the development- 240k is not a massive amount above the open market value of these units......

Make sure you have all the pertinent information. Do seriously enquire about the shared ownership too, before its too late though- you might be very pleasantly surprised.......

debs1977

smccarrick wrote: »

Have you checked the shared ownership scheme?
Also- as alluded to above, many people have successfully gotten the prices of units reduced in the development- 240k is not a massive amount above the open market value of these units......

Make sure you have all the pertinent information. Do seriously enquire about the shared ownership too, before its too late though- you might be very pleasantly surprised.......

I haven't looked into the shared ownership I have to admit. I have an idea of what it involves but it will do no harm to investigate further. Are there more waiting lists??

When you say people have got a reduced price on units in the development..much reduction do you mean? I'm not naive enough to believe that the remaining few (they are all gone) might not have needed a few thousand knocked off to guarantee sale. In the current climate very little seems to be selling.

I can't imagine any two bed going for less than 300k, still saving me 60k...although I could be wrong?

I would have no problem haggling a little on it but don't know if I'm in the right position as an affordable buyer. Question the Market Value with South Dublin?, or the selling price that would have been agreed between them and the developer last year??

Thanks again for your help!

The_Conductor

A good thing to do would be to contact the local estate agents, as a lot of the banks/building societies use them to do valuations on their behalf. Sherry Fitzgerald have done a number in the Lucan area- and would have a very good idea of what a realistic open market valuation for the units is.

For example- were one to be put on the market for sale in the morning- what would it reach? Most probably in the region of 280-285k.

The reductions that I have heard mentioned are more in the region of 10% off the headline price, than a couple of thousand........... I.e. the guts of 25-30k off......

Re: Shared ownership scheme. Its income dependent. Once you meet the qualifying criteria of the council and are cleared to go ahead- you go and find a house (any house at all, anywhere, that suits you) and you offer an agreed amount with the council paying a particular share of the bill and owning a portion of the property (say 30%) and you owning the other 70%. You pay an agreed rent on the 30% that you don't own, and your budget jumps into categories that you wouldn't otherwise be able to meet. You get a house well beyond something you can afford on your own,and are not stuck with the dregs of property that turn up on the Affordable Housing schemes (tends to be ground floor apartments, or apartments in less desireable areas).

Big pro- you get to choose a house yourself- where you want to live, you're not limited to to whatever pops on the AH radar, more often than not you get a property that will actually be resaleable down the road (I'm convinced that a lot of the apartments built recently will have to be demolished and redeveloped down the road into reasonable family sized units.

Ask the council- I really think its a far preferable option to the AH scheme at the moment- particularly the way the second hand market is tanking.......

debs1977

smccarrick wrote: »

A good thing to do would be to contact the local estate agents, as a lot of the banks/building societies use them to do valuations on their behalf. Sherry Fitzgerald have done a number in the Lucan area- and would have a very good idea of what a realistic open market valuation for the units is.

For example- were one to be put on the market for sale in the morning- what would it reach? Most probably in the region of 280-285k.

The reductions that I have heard mentioned are more in the region of 10% off the headline price, than a couple of thousand........... I.e. the guts of 25-30k off......

Re: Shared ownership scheme. Its income dependent. Once you meet the qualifying criteria of the council and are cleared to go ahead- you go and find a house (any house at all, anywhere, that suits you) and you offer an agreed amount with the council paying a particular share of the bill and owning a portion of the property (say 30%) and you owning the other 70%. You pay an agreed rent on the 30% that you don't own, and your budget jumps into categories that you wouldn't otherwise be able to meet. You get a house well beyond something you can afford on your own,and are not stuck with the dregs of property that turn up on the Affordable Housing schemes (tends to be ground floor apartments, or apartments in less desireable areas).

Big pro- you get to choose a house yourself- where you want to live, you're not limited to to whatever pops on the AH radar, more often than not you get a property that will actually be resaleable down the road (I'm convinced that a lot of the apartments built recently will have to be demolished and redeveloped down the road into reasonable family sized units.

Ask the council- I really think its a far preferable option to the AH scheme at the moment- particularly the way the second hand market is tanking.......

Had a look into the Shared Ownership, my salary is above threshold for this and the maximum house value they will allow you to purchase is 210k. If the purchase price wasn't so low it would be a good scheme.

Rang Sherry Fitz to see if I could get any info out of them - told me nothing I didn't know already - value should be around 320k, I can't enquire anonymously as a buyer as they're sold already.

DubLass

My brother is going through the same situation and has paid his deposit to DCC secure the apartment. Hes currently being asked for €2500 by the solicitor for the builder for signing contracts - is this usual procedure?