If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)

Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

Buying in a falling market

Joseph Kuhr · 2008-08-25 12:37:40

Save yourself a headache and don't bother reading this thread. The Acommodation and Property troll brigade have struck again. You'll find nothing discussed here other than the usual egotistical drivel spouted by people with alterior motives, some of which have been exposed - they've never even bought property before. In…

Options

Comments

Options
#122 03-09-2008 9:20pm
Sarn

Registered Users Posts: 3,060 ✭✭✭

Join Date: February 2003

Posts: 3019

ZYX wrote: »

Of course you are forgetting to include inflation. If we assume a very low level of inflation of just 2% on average for next 30 years. The house bought at €300,000 after 30 years is worth €540,000 and the house bought at €400,000 is worth €724,000. So while the dearer house would cost €160,000 to buy over the lifetime of the loan, it would be worth €180,000 more.

I think making the assumption that these are two identical 1 bed apartments next door to each other (for example) clarifies things.

One person bought one for €400k two years ago (at a rate of 4%) and the other person bought one today for €300k (at a rate of 6%) with similar terms. (This is taking the current economic climate and witnessed property drops into account and will not always be applicable.) From the time that the second person buys they are the same price. Their price will track each other so that they will both be worth the same in 30 years. With the second person paying far less interest and capital then the first individual.

There is also an assumption that the first buyer has a decent tracker and that the second buyer has a poor variable. This is not always the case with people emerging from discounted trackers to the same higher rates that a recent buyer is on.

0