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House Prices To Drop Everywhere? - Opinion

  • 21-08-2008 10:17am
    #1
    Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭


    Been looking to buy or build a house for the past year or so. We've finally found a house that myself and my girlfriend agree on and that could possibly be within budget if we get it for the price we want. Although from reading Morgan Kellys comments it seems we would be crazy to buy now.

    My question is, I can see prices dropping drastically maybe in Dublin etc.. but will they drop as much in the likes of Donegal? I cant see house prices being halved up here. If we were to buy a site and build a house of similar build to the one we looked at then it would cost similar to what we are willing to pay for it. The guide price on the house is 50k more than we'd be willing to offer. We would obviously offer less (10-20k less) but would now offer less again (50k) because of the state of the housing market.

    Interested to hear peoples view on this? Do you reckon prices will drop everywhere? I find it hard to imagine crazy drops here in Donegal.


Comments

  • Moderators, Society & Culture Moderators Posts: 32,286 Mod ✭✭✭✭The_Conductor


    chris_ie wrote: »
    Interested to hear peoples view on this? Do you reckon prices will drop everywhere? I find it hard to imagine crazy drops here in Donegal.

    Prices may not drop everywhere- but prices for certain types of properties (in particular apartments) most certainly will. Would I be surprised with crazy drops in Donegal- no I wouldn't be surprised, drops of 40-50% (from peak 2006 prices) are entirely plausible. There was an assumption that massive numbers of civil servants (several hundred) would up sticks and move to Letterkenny- and houses were built on the assumption that they would be sold at top dollar- most of them are now vacant.

    There is also a shocking amount of vacant rental property in the county.

    Have a look around yourself- don't rely on the internet or estate agents. Supply in the Northwest is vast, and demand is limited- basic laws of supply and demand dictate that prices will fall- by how much, no-one knows.


  • Closed Accounts Posts: 1,376 ✭✭✭gaeilgegrinds


    Prices are dropping at hugely varying rates. For eg. an apt in Tralee my cousin bought dropped 80k, whereas houses in the area I live in in Galway have dropped maybe 10 or 15k. Big difference there!


  • Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭chris_ie


    Yeah I know what you mean. Its just annoying trying to decide what to do. Finally find a house we like and then see that we're advised to wait! My only fear is that if we wait and prices come down we could lose out on the houses that we like. It took us ages to find a house we agreed on :p. House is valued at 350k. We were thinking on offering 300k or just under. But not sure what to do now.


  • Closed Accounts Posts: 964 ✭✭✭Boggle


    The guide price on the house is 50k more than we'd be willing to offer. We would obviously offer less (10-20k less) but would now offer less again (50k) because of the state of the housing market.
    Offer what your willing to offer and don't stress about it. They'll either take it or refuse it but by sticking to your guns you'll have much more comfort living there.
    No point having the house of your dreams and having to stress over bills - especially when the NEXT house of your dreams will come at what you want to spend as prices are only coming down and down hard.


  • Closed Accounts Posts: 759 ✭✭✭mrgaa1


    was talking to a friend yesterday and that as they are First Time Buyers they are going to buy now because they are afraid of prices dropping and not getting the house they want - just like a previous poster - and that the houses will be snapped up as they for sale at under 170k - 3 bed semi-house. The houses have dropped from around 200 so I suppose thats a 15% drop. They want to set down some roots so I suppose this is what they have to do.
    It also seems that there are plenty of great deals about - but again only useful if there is someone to buy them.


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  • Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭chris_ie


    Yeah I'm kinda of the same mind. Worried that if I buy not I'll regret it if prices come down big time but also worried that if I wait prices come down and the house(s) we like are snapped up. We've more or less been waiting over a year for prices drops and nothing significant has happened up here anyways. If we got the house for what we'd like to pay for it it would be in effect a 15% drop.


  • Registered Users, Registered Users 2 Posts: 535 ✭✭✭Westwood


    Best bet would be to build. The ready built houses will take the knock if anything in Donegal. House prices have slightly falling in recent times up here. Land will always remain pretty stagnant so my advice would be to build. If you can afford it something beautiful. The house of your dreams. btw do you know of any cheap sites? ask daddy for us would ya....:)


  • Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭chris_ie


    "ask daddy for us would ya..." ???

    We had looked about building but its quite a bit of hassle as we're not from the area. We're not far from it but we wouldn't get planning permission so would be building 'illegally'. Plus it would cost the same as the offer we would put in for the house we are interested in to buy the site and build.


  • Moderators, Society & Culture Moderators Posts: 32,286 Mod ✭✭✭✭The_Conductor


    Westwood wrote: »
    Land will always remain pretty stagnant so my advice would be to build.

    Not true.
    Land prices are in freefall even more so than residential property prices. Check the going price in any auctioneers. The development potential of land was priced into the transactions up to when things started to go south, and has really thrown the cat among the pidgeons. Look at farm prices recently achieved- Farmers Journal is probably better for getting a feel of this.
    Land prices are in freefall every bit as much as residential property prices..........


  • Registered Users, Registered Users 2 Posts: 1,366 ✭✭✭whizzbang


    There is a massive oversupply of empty houses right now. There are fewer and fewer immigrants coming into the country and more and more people leaving. This means that an awful lot of those properties are going to remain on the market for a long time, with nobody snapping them up.

    I personally believe house prices nationwide will drop to whatever they were about 2000/2001. If Donegal has gone up hugely since then, they will drop hugely, if they have not gone up much, then they will not go down much.

    Everything returns to the mean eventually.


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  • Closed Accounts Posts: 4,048 ✭✭✭SimpleSam06


    Prices are dropping at hugely varying rates. For eg. an apt in Tralee my cousin bought dropped 80k, whereas houses in the area I live in in Galway have dropped maybe 10 or 15k. Big difference there!
    Where is that, out of interest? I read in the papers here that prices had dropped 10% at the start of the year, which comes to between €30k and €45k depending on where you are buying. Most places you can get 10% or more off just by asking, these days.


  • Registered Users, Registered Users 2 Posts: 8,800 ✭✭✭Senna


    chris_ie wrote: »
    Been looking to buy or build a house for the past year or so. We've finally found a house that myself and my girlfriend agree on and that could possibly be within budget if we get it for the price we want. Although from reading Morgan Kellys comments it seems we would be crazy to buy now.

    My question is, I can see prices dropping drastically maybe in Dublin etc.. but will they drop as much in the likes of Donegal? I cant see house prices being halved up here. If we were to buy a site and build a house of similar build to the one we looked at then it would cost similar to what we are willing to pay for it. The guide price on the house is 50k more than we'd be willing to offer. We would obviously offer less (10-20k less) but would now offer less again (50k) because of the state of the housing market.

    Interested to hear peoples view on this? Do you reckon prices will drop everywhere? I find it hard to imagine crazy drops here in Donegal.

    Donegal is probably in as bad a shape as anywhere else in the country, there is nothing in Donegal to stop the house price slide. Very little future investments on the horizon and the unemployment rate is the highest and average wage the lowest in Ireland.

    i've been watching the housing market in letterkenny for the last two years, we even went sale agreed on a house 2 months ago, but we backed out after the builder messed us around with the spec of the house.
    Prices in Donegal have a long way to fall yet, at the moment i would't even look at a house that did't have a 25% drop in price from peek.
    The house we went sale agreed on was on the market in 2007 for 380-390k, it dropped to 330k and we agreed a price of 275K, that house still hasn't sold and will probably sell for maybe 250K or less and that's if it sells soon.


    Secondhand house sellers are still in denial about the value of their houses, but builders seem to be under more pressure and are willing to negotiate to get a house sold. we looked into building, but from the research we done, it was only saving us 10k by building rather than buying, add the heartache and time scale and it just wasn't worth it.


  • Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭chris_ie


    Wow, biggest drop I've heard of in Letterkenny. House we're looking at is 350k at the min. Its been like that for quite a while. Not to sure how many houses the guy owns. I know he owns two and one is currently being rented out. I think he has other houses too. If we put in a but of around 250-260k we'd probably get laughed at aswell as all other house I've seen around that mark are no where near the quality of it. Its hard to know what to do. First we hear its a great time for buyers, then we've been waiting around for over a year and now people are saying not to buy. Could end up in a mad rush in the end when prices do stabilize.
    Senna wrote: »
    Donegal is probably in as bad a shape as anywhere else in the country, there is nothing in Donegal to stop the house price slide. Very little future investments on the horizon and the unemployment rate is the highest and average wage the lowest in Ireland.

    i've been watching the housing market in letterkenny for the last two years, we even went sale agreed on a house 2 months ago, but we backed out after the builder messed us around with the spec of the house.
    Prices in Donegal have a long way to fall yet, at the moment i would't even look at a house that did't have a 25% drop in price from peek.
    The house we went sale agreed on was on the market in 2007 for 380-390k, it dropped to 330k and we agreed a price of 275K, that house still hasn't sold and will probably sell for maybe 250K or less and that's if it sells soon.


    Secondhand house sellers are still in denial about the value of their houses, but builders seem to be under more pressure and are willing to negotiate to get a house sold. we looked into building, but from the research we done, it was only saving us 10k by building rather than buying, add the heartache and time scale and it just wasn't worth it.


  • Registered Users, Registered Users 2 Posts: 8,800 ✭✭✭Senna


    biggest drop (€€) i've seen in Letterkenny was a house in Lurgybrack, it started at 680k (which was just stupid) about 1.5yrs ago, it went sale agreed last week at 420k or a bit less. It had dropped quite a few times and was advertised at 500 or 520k (not sure which) when the offer was accepted.


  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,550 Mod ✭✭✭✭johnnyskeleton


    chris_ie wrote: »
    My question is, I can see prices dropping drastically maybe in Dublin etc.. but will they drop as much in the likes of Donegal? I cant see house prices being halved up here. If we were to buy a site and build a house of similar build to the one we looked at then it would cost similar to what we are willing to pay for it. The guide price on the house is 50k more than we'd be willing to offer. We would obviously offer less (10-20k less) but would now offer less again (50k) because of the state of the housing market.

    To be honest, houses outside Dublin are going to drop much more drastically than houses in Dublin. Although the ERSI stats suggest that house prices in Dublin are currently decreasing by a greater rate, this is because houses are actually selling in Dublin, whereas a lot of properties outside of Dublin (Leitrim and Longford for two examples) are not selling at all, and some of these properties are unlikely to sell at any price.


  • Closed Accounts Posts: 3,807 ✭✭✭chump


    I dunno if you can point at a particular area and guess how much it's going to drop by.

    I wouldn't be surprises if some places in and around Dublin dropped significantly.
    A lot of apartments in the high digit area codes (16+) and county Dublin areas are not well connected to the city and were hugely overpriced.

    I dunno if the places in Leitrim and Longford were ever overpriced as much.

    Any apartment not within a convenient public transport hop of any of the major cities will be hit the worst IMO.

    Just had one quick look on daft...

    http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[a_id]=288&s[mnp]=&s[mxp]=&s[bd_no]=&s[search_type]=sale&s[furn]=&s[refreshmap]=1&offset=10&limit=10&search_type=sale&id=392140

    surely that's overpriced?


  • Moderators, Society & Culture Moderators Posts: 32,286 Mod ✭✭✭✭The_Conductor


    chump wrote: »

    A bit- but the new Luas line is due to open in a few months? At least there is an inherent reason for its price. The inherent reason for charging 300k in Leitrim is so you can write it off against your taxes. At the end of the write off period (in most cases 12 years) you still have the asset, albeit a wholly unsaleable asset. Someone will rent that apartment in Sandyford no probs, perhaps not at a price that would support a mortgage at its current asking price- but there is at very least a fundamental value north of 200k on that property- purely from its rental capacity. An apartment in Leitrim would have a fundamental value of 50-60k using the same yard stick......


  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,550 Mod ✭✭✭✭johnnyskeleton


    chump wrote: »
    I dunno if you can point at a particular area and guess how much it's going to drop by.

    While I don't have a crystal ball, I can have at least have a guess.
    chump wrote: »
    I dunno if the places in Leitrim and Longford were ever overpriced as much.

    There are thousands of empty properties in Leitrim and Longford, and no real demand for living there.
    chump wrote: »
    Any apartment not within a convenient public transport hop of any of the major cities will be hit the worst IMO.

    Any place without convenient public transport to a major city, so most of Leitrim and Longford then?

    chump wrote: »

    Unless Microsoft up sticks and move to Ballymahon, the Sandyford place is much more likely to sell.


  • Closed Accounts Posts: 3,807 ✭✭✭chump


    While I don't have a crystal ball, I can have at least have a guess.



    There are thousands of empty properties in Leitrim and Longford, and no real demand for living there.



    Any place without convenient public transport to a major city, so most of Leitrim and Longford then?




    Unless Microsoft up sticks and move to Ballymahon, the Sandyford place is much more likely to sell.


    Johnny ya seem to have taken up my post wrongly.

    I was responding to;
    To be honest, houses outside Dublin are going to drop much more drastically than houses in Dublin.

    Which I don't necessarily agree with.

    You can't just take Leitrim and Longford and say 'well there ya go'.

    I agree they're in trouble. :)


  • Closed Accounts Posts: 3,807 ✭✭✭chump


    smccarrick wrote: »
    A bit- but the new Luas line is due to open in a few months? At least there is an inherent reason for its price. The inherent reason for charging 300k in Leitrim is so you can write it off against your taxes. At the end of the write off period (in most cases 12 years) you still have the asset, albeit a wholly unsaleable asset. Someone will rent that apartment in Sandyford no probs, perhaps not at a price that would support a mortgage at its current asking price- but there is at very least a fundamental value north of 200k on that property- purely from its rental capacity. An apartment in Leitrim would have a fundamental value of 50-60k using the same yard stick......


    Hi smccarrick,
    Is the Luas line going to service people in those areas?
    It seems to be quite a spread out collection of developments around that area.

    The reason I picked that example is because it was one of the first I saw for Sandyford on daft and having visited out there maybe 9 months ago I can tell ya the way the place has been built up is fairly shocking.

    Little apartment towns that need connecting buses to the Luas (that are fairly irregular) and take a deal of time to get there.

    I just think the area is overbuilt and overpriced for what it has to offer.

    And again with the Leitrim and Longford example, I was responding to the statement
    To be honest, houses outside Dublin are going to drop much more drastically than houses in Dublin.

    Cork, Galway, Limerick - all these cities?
    Their close suburban centres?

    Balbriggin
    Baldoyle
    Blanch
    Clondalking
    Clonsilla
    Lucan
    Malahide
    Santry
    Tyrllstown


    The point I'm making is some of these places sold apartment properties for hugely inflated 'Dublin' prices.
    I don't agree that these prices are necessarily going to hold up better than prices for everywhere outside Dublin.


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  • Registered Users, Registered Users 2 Posts: 4,034 ✭✭✭Theboinkmaster


    smccarrick wrote: »
    A bit- but the new Luas line is due to open in a few months? At least there is an inherent reason for its price. The inherent reason for charging 300k in Leitrim is so you can write it off against your taxes. At the end of the write off period (in most cases 12 years) you still have the asset, albeit a wholly unsaleable asset. Someone will rent that apartment in Sandyford no probs, perhaps not at a price that would support a mortgage at its current asking price- but there is at very least a fundamental value north of 200k on that property- purely from its rental capacity. An apartment in Leitrim would have a fundamental value of 50-60k using the same yard stick......

    The luas line is nowhere near that development. Sandyford is like Rathfarnham in that it is spread across a huge area and parts of not really rathfarnham. Ticknock is about a 45min walk from the nearest luas stop (incl new stops in the next few years). It's really ballinteer/rathfarnham area.


  • Registered Users, Registered Users 2 Posts: 620 ✭✭✭BobbyD10


    chump wrote: »
    Is the Luas line going to service people in those areas?

    Nope not really.

    The reason I picked that example is because it was one of the first I saw for Sandyford on daft and having visited out there maybe 9 months ago I can tell ya the way the place has been built up is fairly shocking.

    True.

    Little apartment towns that need connecting buses to the Luas (that are fairly irregular) and take a deal of time to get there.

    114 I think the bus is.

    I just think the area is overbuilt and overpriced for what it has to offer.

    True again, the prices have been 380k-400k so have been coming down.

    The luas line is nowhere near that development. Sandyford is like Rathfarnham in that it is spread across a huge area and parts of not really rathfarnham. Ticknock is about a 45min walk from the nearest luas stop (incl new stops in the next few years). It's really ballinteer/rathfarnham area.

    True, best to get the bus as walking on the blackglen road to the luas I wudn't fancy.


  • Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭chris_ie


    This house buying business is quite frustrating. One minute being told, great time to buy a house its a buyers market etc. etc. then the next people are saying dont buy yet. When will we know when to buy? Do we just keep reading papers and listening to what other people say? Obviously I'm not clued into the property business that much. Just wish I knew the lowest the house we're looking at would go. So we could know if its worth waiting or not. But I'm sure everyone is thinking the same thing!


  • Moderators, Society & Culture Moderators Posts: 32,286 Mod ✭✭✭✭The_Conductor


    chris_ie wrote: »
    This house buying business is quite frustrating. One minute being told, great time to buy a house its a buyers market etc. etc. then the next people are saying dont buy yet. When will we know when to buy? Do we just keep reading papers and listening to what other people say? Obviously I'm not clued into the property business that much. Just wish I knew the lowest the house we're looking at would go. So we could know if its worth waiting or not. But I'm sure everyone is thinking the same thing!

    There is no such thing as a perfect time- its all relative. If the property is right for you and you can afford it- buy it. If you're sitting on the fence in the hope it'll drop another 20%- well maybe it will, maybe it won't. The "investor" attitude has infected the market- where people are looking at the headline price a house has. While its understandable, the inherent reason for buying a house is as accommodation for you and your family. If it goes up in value, great. If not- well, its a roof over your head- which should be its first worth to a buyer over and above all other considerations. If you don't really care so much for a property- but feel brow beaten into buying- obviously you are buying purely as a result of peer pressure, nothing more, nothing less. Houses are like any other asset- they can go up and down in value. I spent almost 10 grand on Deutsche Telekom shares a few years back- when the media were hyping telecoms companies to the stratosphere and the prevailing wisdom was that it was a sure bet. When eventually I got Merrion to offload them for me- I got just over 800 for them- almost a 90% fall in value. I was disappointed- but I could afford to take the loss- I was not emotionally involved in them, I learnt a lesson, moved on and haven't made the same error since (thats not to say I haven't gambled on the stock market- just that I am actually looking at fundamentals and am choosy).

    If you are buying your house as a long term investment first and foremost- sit on the fence and wait. Its impossible to call the bottom of a market- but its highly probable that it has quite some way to go before it bottoms out (dead cat bounces notwithstanding). If you see a nice house for you and your family and you'll be happy there for the next 20-30 years- buy whenever suits you to buy. However understand that its not an investment property- its a home, first and foremost.


  • Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭chris_ie


    Yeah I know what you mean. We are a buying it as our home. Not with a view of how much we can sell it for. We're buying to live in it for quite a long time unless something comes up and we need to move for some reason or another.


  • Registered Users, Registered Users 2 Posts: 68,317 ✭✭✭✭seamus


    chris_ie wrote: »
    Yeah I know what you mean. We are a buying it as our home. Not with a view of how much we can sell it for. We're buying to live in it for quite a long time unless something comes up and we need to move for some reason or another.
    Well then don't stress too much about the "right time". Yes, you will pay a little more in mortgage repayments if you buy at a higher price, but then you run the risk of interest rates going up if you don't buy now. Equally, you face the risk of interest rates dropping after you've fixed at a higher rate now.

    As said, there is a "perfect time" in economic terms to buy a house, but that time can only be pinpointed after it's passed. The right time for a person to buy is the time when they've found somewhere they're happy to call home for the next decade and they can comfortably afford the repayments.

    These things are cyclical, and you'll always have debates about where in the cycle we are. One paper will give a positive outlook and then a column elsewhere in the same paper will give the exact opposite outlook. If you're really unsure, then it makes sense to watch the market yourself for a month or two to get a feel about where things are going rather than trying to rely on commentary from the media.

    It's interesting I think to note how the commentary is cyclical in itself. Pre-2004, it seemed as though everybody was in agreement - the market was strong and booming and prices were going to keep going up, so buy while you can.
    Sometime in 2004 then there appeared a bit of dissent - some people broke off and started claiming that we were hitting the ceiling, and a crash was imminent in the next six months. As time wore on, the number of people with this outlook increased. Then the market crashed in 2006. Through 2007, people were slowly coming around to the acceptance that prices were no longer rising, and by the end of 2007, most if not all people had accepted that the boom was over; Prices are going to keep going down, so stay out of the market.
    And sentiment has largely stayed like that for the last six months. In the past few weeks though, there seems to be that growing "dissent" again - there are more and more pundits who now seem to be claiming that we've hit the bottom and a return to normality is imminent within six months.
    Make of that what you will. I've learned that making predictions is great as an academic exercise, but otherwise is largely futile.

    The one great thing that this crash has done is inject a little bit of cop into the Irish mindset of, "You can't lose on property", which largely fuelled the boom in the first place.


  • Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    Chris, are you currently renting with the girlfriend? What are the rental options in the area?


  • Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭chris_ie


    Yeah been renting for around two years now, paying off landlords mortgage! Getting fed up paying dead money and we've been thinking about buying for quite a while and been looking for around the past year.
    SkepticOne wrote: »
    Chris, are you currently renting with the girlfriend? What are the rental options in the area?


  • Registered Users, Registered Users 2 Posts: 1,366 ✭✭✭whizzbang


    chris_ie wrote: »
    Yeah been renting for around two years now, paying off landlords mortgage! Getting fed up paying dead money and we've been thinking about buying for quite a while and been looking for around the past year.

    Rent is not dead money, you are just paying for a service. Is getting a taxi dead money? Is paying someone to cut your hair dead money?
    Don't forget that for the first few years of a mortgage the bulk of what you pay will be interest charges, if rent is dead money, so is mortgage interest. Your mortgage interesting is paying off your bank manager's mortgage ;)

    It can feel frustrating that you are not "on the ladder" but think of all of the positive sides of renting:
    No house price risk
    No service charges
    No maintenance on the property
    More flexibility
    No property insurance

    Renting has a lot of positives that are often overlooked.

    As way of a personal example I'm paying about 16,000 a year to rent (split with flat mate). The property we are in is perfect for our needs, has a 1,500 a year management fee, costs a load of money to insure and is currently dropping about 50k a year in value...


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  • Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭chris_ie


    Yeah I know its not completely dead money but the fact is that if we were in our own house at least the money we were paying each month would bring us closer to owning our own home. At the minute it doesn't. Also we would like to be able to do what we want with the house. When your renting its not your house so you can really do anything like modify things and 'make it your own'. Plus we are living in a semi-detached house, you can hear the neighbours going up and down stairs and you'd swear they were in our house and also its just wooden foors so when someone is upstairs you hear everything. Like when my girlfriend goes to bed and I stay up to watch a bit of TV she can hear the tv, strangely it actually seems louder upstairs than in the sitting room itself!

    We could rent for the next 40 years and still have nothing to show for it, sure we've had a house to live in for 40 years but after those 40 years we're still going to be paying rent. Whereas if we bought a house, then after 40 years it could be ours and we could have no more rent to pay.

    Also, once the landlord has the mortgage paid off, with our help, then he could easily kick us out and sell up, then we would have to find somewhere else and the same thing could happen again.

    I do get your point though but I still think that the advantages of owning your own house outweigh the advantages of renting.
    whizzbang wrote: »
    Rent is not dead money, you are just paying for a service. Is getting a taxi dead money? Is paying someone to cut your hair dead money?
    Don't forget that for the first few years of a mortgage the bulk of what you pay will be interest charges, if rent is dead money, so is mortgage interest. Your mortgage interesting is paying off your bank manager's mortgage

    It can feel frustrating that you are not "on the ladder" but think of all of the positive sides of renting:
    No house price risk
    No service charges
    No maintenance on the property
    More flexibility
    No property insurance

    Renting has a lot of positives that are often overlooked.

    As way of a personal example I'm paying about 16,000 a year to rent (split with flat mate). The property we are in is perfect for our needs, has a 1,500 a year management fee, costs a load of money to insure and is currently dropping about 50k a year in value...


  • Closed Accounts Posts: 4,048 ✭✭✭SimpleSam06


    seamus wrote: »
    Sometime in 2004 then there appeared a bit of dissent - some people broke off and started claiming that we were hitting the ceiling, and a crash was imminent in the next six months. As time wore on, the number of people with this outlook increased. Then the market crashed in 2006.
    There was always dissent, even as far back as 2001. Some of it came from the Irish Central Bank which released a report saying that property prices were overvalued all the way back then. The correlation between value and price diverged more and more steeply as time went on, until things peaked. It was a very unusual combination of circumstances that led to the boom.
    seamus wrote: »
    And sentiment has largely stayed like that for the last six months. In the past few weeks though, there seems to be that growing "dissent" again - there are more and more pundits who now seem to be claiming that we've hit the bottom and a return to normality is imminent within six months.
    No. What you have now is the same people who were always cheering on property trying to rally a bull run on a foundation of quicksand, probably with their own interests front and centre. The dissent has been entirely without practical reasoning, unlike the earlier dissent which was based on very realistic thinking.

    The cyclical nature of economics is oft repeated but rarely understood. Some commodities or sections of the economy go up and stay up for extended periods, some go up and down, then stay down for likewise extended periods. In my opinion, the Irish property market is the latter. Its not like it will swing up to its former heights then back down and up again.

    Between oversupply and the hiding the banks are in the process of taking, it will be a long, long time before there is anything like the property boom in Ireland again, if ever.

    To be honest, I see prices going down for another few years and levelling out for at least a couple of decades. There might be the odd bounce and dip along the way, but the era of double digit appreciation is gone for good.


  • Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    Chris, remember that the interest portion of a mortage is also dead money. No matter what you do you will be paying dead money and often the amount of dead money renting is less than that of paying interest on a mortgage. The only reason you end up with an asset at the end of the 40 years or whatever the term is, is because you pay additional capital repayments on top of your interest.

    This calculator by Carl Jeacle allows you to work out how much dead money you will be paying in a mortgage.

    http://www.jeacle.ie/mortgage/

    As Whizbang points out, dead money is misleading. In both cases you are paying for a service. In one case you are renting a property directly in the other you are renting money which you then use to buy the house.

    Sometimes it is cheaper to rent than to buy even taking into consideration the fact that you end up with an asset at the end of the mortgage term.

    I'm not saying don't buy. I'm saying if you compare a mortgage with renting it is not as simple as rent=dead money, mortgage=a house since there is dead money in both. Plus a load of other expenses involved in buying, selling and owning a house.

    The other thing is that there's been a huge increase in the number of rentals available in Donegal according to Daft.

    http://daftwatch.atspace.com/daftcounty_24.html

    The number of places to rent in Donegal looks to have trebled in the the past year although some of this could be explained by increased use of Daft by landlords in that county. You should consider taking advantage of the much greater power renters have in the current market. See what you can negotiate for a property that does not have the drawbacks of your current place.

    Note that none of the above has anything to do with movement in prices. House prices could remain flat from now on, but still not be good value.


  • Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭chris_ie


    Like I said. I know rent is not all dead money. But what I am saying is that I could rent for 40 years and have nothing or buy a house and own the house after 40 years. We wont be paying interest for 40 years. Yeah the first number of years will mostly if not all be interest payments. But it will eventually start paying off the house.

    It was my mistake saying dead money. I didnt mean that it was a complete waste.

    But also as I said above. Landlords can kick you out when they want. And if your renting for a long time chances are that his/her mortgage will be paid off at some stage and you'll be kicked out.

    Again, I do understand your points but I'm looking at both sides and I still believe that buying has more advantages.
    SkepticOne wrote: »
    Remember that the interest portion of a mortage is also dead money. No matter what you do you will be paying dead money and often the amount of dead money renting is less than that of paying interest on a mortgage. The only reason you end up with an asset at the end of the 40 years or whatever the term is, is because you pay additional capital repayments on top of your interest.

    This calculator by Carl Jeacle allows you to work out how much dead money you will be paying in a mortgage.

    http://www.jeacle.ie/mortgage/

    As Whizbang points out, dead money is misleading. In both cases you are paying for a service. In one case you are renting a property directly in the other you are renting money which you then use to buy the house.

    Sometimes it is cheaper to rent than to buy even taking into consideration the fact that you end up with an asset at the end of the mortgage term.

    I'm not saying don't buy. I'm saying if you compare a mortgage with renting it is not as simple as rent=dead money, mortgage=a house since there is dead money in both. Plus a load of other expenses involved in buying, selling and owning a house.

    The other thing is that there's been a huge increase in the number of rentals available in Donegal according to Daft.

    http://daftwatch.atspace.com/daftcounty_24.html

    The number of places to rent in Donegal looks to have trebled in the the past year although some of this could be explained by increased use of Daft by landlords in that county. You should consider taking advantage of the much greater power renters have in the current market. See what you can negotiate for a property that does not have the drawbacks of your current place.

    Note that none of the above has anything to do with movement in prices. House prices could remain flat from now on, but still not be good value.


  • Registered Users, Registered Users 2 Posts: 1,366 ✭✭✭whizzbang


    chris_ie wrote: »
    I do get your point though but I still think that the advantages of owning your own house outweigh the advantages of renting.

    I want to own a house some day as well, but I'm just trying to suggest that you don't have to buy *right now* as there are other options.

    Renting until a good place you can afford becomes available seems like the best idea to me. Rather than buying a bad place (with bad sound insulation ;)) that will cripple you with excessive repayments.

    If you can buy a good quality place that you are happy to live in for 10 years without killing yourself with a mortgage then go for it.

    Buying a crappy "Starter home" where you can hear a mouse next door fart just to "get on the ladder" is not a good idea in my book.


  • Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭chris_ie


    whizzbang wrote: »
    Buying a crappy "Starter home" where you can hear a mouse next door fart just to "get on the ladder" is not a good idea in my book.

    haha

    Yeah, the house we are looking at is not a crappy 'Starter Home', it really is a nice house and is detached, concrete floors (cant hear people upstairs when downstairs), underfloor heating, detached garage, nice area (small estate with 5 other houses) etc.. Its the first house of many that we both liked, and had a kitchen that my girlfriend liked :p. The mortgage repayments would be affordable too.


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  • Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    chris_ie wrote: »
    Like I said. I know rent is not all dead money. But what I am saying is that I could rent for 40 years and have nothing or buy a house and own the house after 40 years. We wont be paying interest for 40 years. Yeah the first number of years will mostly if not all be interest payments. But it will eventually start paying off the house
    Yes, over the lifetime of the mortgage the interest payments become less and less. Obviously just renting and pissing the rest of the money saved up the wall will leave you with nothing at the end of 40 years. But this is not a valid comparison. The assumption is that you will invest the difference. The comparison is rent+invest vs repay a mortgage.
    It was my mistake saying dead money. I didnt mean that it was a complete waste.
    There's no problem calling rent "dead money", imo, so long there's consistancy and we call interest dead money too. With a mortgage you get to pay the dead money towards the beginning of the term but this gradually gives way to capital repayments. With renting (+investing) the dead money is spread out over the 40 years. But the fact that you pay less dead money early on means you have more to invest early on and this will work in your favour at the end of the term.
    But also as I said above. Landlords can kick you out when they want. And if your renting for a long time chances are that his/her mortgage will be paid off at some stage and you'll be kicked out.
    However at the moment, with the amount of supply out there due to the building that has gone on, landlords are likely to try and hold on to the tenants they currently have.
    Again, I do understand your points but I'm looking at both sides and I still believe that buying has more advantages.
    Financially the equation is whether the dead money buying outweighs the dead money renting.

    I don't want to stop you buying and there are certainly non-financial reasons to buy.


  • Registered Users, Registered Users 2 Posts: 1,366 ✭✭✭whizzbang


    chris_ie wrote: »
    haha

    Yeah, the house we are looking at is not a crappy 'Starter Home', it really is a nice house and is detached, concrete floors (cant hear people upstairs when downstairs), underfloor heating, detached garage, nice area (small estate with 5 other houses) etc.. Its the first house of many that we both liked, and had a kitchen that my girlfriend liked :p. The mortgage repayments would be affordable too.

    Sounds reasonable. A few other things you may like to consider:

    Does it make you overly dependent on the car?
    Are there schools and such nearby?
    Would you mind sitting in negative equity for a while?
    How would you fair if one of you was out of a job for a few months?

    If these are all ok and you have the money then definitely consider it. But it may also be worth considering holding off for a while to see if you can get someone nicer for less.


  • Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭chris_ie


    Get you now about the investing part etc. The way I was originally taking it was that you meant that renting was the better option. My own fault for not thinking about the rest.

    The location of the house we are looking at is only about another 2-3mins up the road from where we are renting so no more or less dependent on the car. There is a school close by and both our work places are close by. If one of us was out of work, obviously it wouldn't be as comfortable but we could still afford the repayments.

    We were thinking on putting in a lowish bid on the house (around 70k less or so). It would probably be laughed at but it would show our interest and if they rejected we would just leave it. If they ever came round they can contact us. I completely agree that it would be horrible to buy now then realise next year that the house price would be alot cheaper. I've also said to my girlfriend that if that house price did drop alot and we didnt manage to get it there would be other houses that were out of our price range initially that would then have fallen into our price range. I am leaning more so to waiting but just gettin frustrated at all the different stories going around about the whole process. But I suppose that happens! Anyways, I've upped my savings today so that the amount of money I'd be paying on a mortgage for that house is now going into savings each month.


  • Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    chris_ie wrote: »
    I am leaning more so to waiting but just gettin frustrated at all the different stories going around about the whole process. But I suppose that happens!
    This is why I suggest you ignore for the moment people's opinion of where the market is going and do the actual calculations.

    Also, imo, you should not allow the fact that you are renting to hold you back in other areas of life. It is true that legislation protecting renters is lacking in Ireland (this is to the great detriment of landlords too, imo) but it is also a renters market as well as a buyers market and finding places is nowhere near the problem it once was.

    If you want to live in a detached house, it is likely to be the case that there's a landlord out there desparate to rent one out and with whom you can negotiate a good deal.


  • Closed Accounts Posts: 365 ✭✭DJDC


    We could rent for the next 40 years and still have nothing to show for it, sure we've had a house to live in for 40 years but after those 40 years we're still going to be paying rent. Whereas if we bought a house, then after 40 years it could be ours and we could have no more rent to pay.

    I don't know where this attitude comes from but it seems to be ingrained in the irish pysche, especially in those less well travelled.

    There's only word for buying a home in this market...stupid. Markets are in turmoil, no one is quite sure how bad things are going to get. Talk about trying to catch a falling piano.


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  • Closed Accounts Posts: 668 ✭✭✭karen3212


    DJDC wrote: »
    I don't know where this attitude comes from but it seems to be ingrained in the irish pysche, especially in those less well travelled.
    .

    I think myself it has something to do with the cost of investing in other areas eg shares for older Irish people in the past, therefore general knowledge about the costs and returns of investing your money elsewhere is missing in our society in general.


  • Closed Accounts Posts: 4,442 ✭✭✭Firetrap


    I suspect it may go way back to when our ancestors didn't own their own houses/land and were at the mercy of the landlords who could turf them out at any time. Owning your own house meant that you had a patch to call your own, a bit of security and it was an asset.

    Historically, house prices did rise but obviously not in the way they've done for a decade. That of course is a whole different story..


  • Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭chris_ie


    Dont hold back DJDC...

    So buying a house is stupid? Obviously at the present time maybe yeah. But the idea of buying a house is not stupid.


  • Registered Users, Registered Users 2 Posts: 250 ✭✭Tom123


    Just having a look at some of the stats on Irish Property Watch and Donegal does not look great.

    The county currently has the 3rd largest stock of unsold properties just behind Dublin and Cork.

    Link


  • Closed Accounts Posts: 6,123 ✭✭✭stepbar


    DJDC wrote: »
    I don't know where this attitude comes from but it seems to be ingrained in the irish pysche, especially in those less well travelled.

    There's only word for buying a home in this market...stupid. Markets are in turmoil, no one is quite sure how bad things are going to get. Talk about trying to catch a falling piano.

    Bully for you if you want to rent for the rest of your life. I'd like to think that when I get to retirement age that I will have somewhere to call my own and not be worrying about the alterative motives of my landlord.

    To the people who (for some reason) seem to believe that houses in the counties Leitrim and Longford are not salable don't obviously have much knowledge about the areas involved.


  • Moderators, Society & Culture Moderators Posts: 32,286 Mod ✭✭✭✭The_Conductor


    stepbar wrote: »
    To the people who (for some reason) seem to believe that houses in the counties Leitrim and Longford are not salable don't obviously have much knowledge about the areas involved.

    Apartments in Leitrim/Longford are going to be incredibly difficult to shift. But- as Publilius Syrus put it almost 2000 years ago- everything is worth what its purchaser is willing to pay for it. If property is priced accordingly to what the market is capable of bearing- regardless of where the property is, it will sell. What is a reasonable price for property though- and how do you manage to shift people's expectations to a point of equilibrium where seller and purchaser are both on the same sheet? Thats the big problem- and its not confined to counties Longford and Leitrim.


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