Buy Now or Wait??????

GUDBUDD2008

Hi Guys and Gals,
I was wondering peoples opinions of buying a house in Dublin now or waiting for longer.???

Me and my girlfriend have been saving for the past 2.5 years to get a deposit together and some extra cash for doing up the house.

It is something we have been working towards and looking forward to
for what seems like forever....

2 Weeks ago we Got mortgage approval for 50 to 60000 more than we were even considering spending so we were pleased with that

However now we are hesitant to put our life savings into something
that could go belly up.

We are considering renting out a room to further cushion ourselves from rising interest rates and/or rising cost of living.....

I know the irish government have made a "GREAT JOB" of things...
But this thread is not about this..

But i would appreciate you guys opinion's as i dont know what to do??????

von Neumann

Ah to buy or not to buy?

Does it suit you to buy now, if so go ahead.
Yes you might loose some money, or make some money, but if owning your own place now will make you happy and let you get on with the important things in life then go for it.

It's only money after all, ya can't take it with you!

gurramok

I'm not so sure you should jump in based on your circumstances if your desperate to buy. Otherwise it would be foolish to buy now as prices will continue to fall.

Having to rent a room to cushion yourselves from a rise on cost of living and/or IR rises signals ye are overstretching yourselves.
Ask yourself, how long will ye have to rent that room to help repayments because after all it won't really be your private space as a couple with a stranger constantly in the house.
Are you also willing to take it on the chin that that house would be cheaper by a few % by the end of the year as in you would be losing money jumping right in now.

What type of mortgage term have you and how much net pay will ye be forking out every month?

Have a look on previous threads here on the issue, there are plenty

Its the biggest financial decision of your life and do continue to research the pitfalls if you do buy now.

D!armu!d

With the country (and the rest of the world) heading into a recession, there's only one way prices are going...

johnnyskeleton

While there are no absolute answers, the general answer at the moment is do not buy.

You'll be alright if you do your homework. This means:
a) decide what your most likely scenario is (for example, live in apartment with girlfriend, in 5 years time will think of moving on if having kids, would like a getout clause as I'm thinking of maybe moving to Australia in a few years if you were offered a job there)
b) work out the costs of i) buying and ii) renting such a property over the time period
c) factor in hidden costs (stamp duty, solictiors fees, maintenance, management fees)
d) hope for the best, expect the worst; make allowances for what would happen if interest rates went up further, house prices dropped and rents decreased/stayed the same. You can look at the opposite scenario, but as buying is riskier than renting, you should be more careful about buying
e) if the possibility arises (in the above example, the job in Oz) how easy would it be to up sticks and leave? Balance the liklihood of the possibility arising with the ease at which you could react to it.

In short, I belive it very likely that house prices will have dropped significantly in 5 years time, interest rates may go up and rents are likely to go down. So unless you get a good deal or have a burning desire to own property listen to gurramok

Gurgle

GUDBUDD2008 wrote: »

However now we are hesitant to put our life savings into something
that could go belly up.

We are considering renting out a room to further cushion ourselves from rising interest rates and/or rising cost of living.....

That sounds a lot like 'foot on the ladder' thinking.
If you've got a 'super-plan' to buy an apartment, sell it in 2 years and buy a 3-bed semi, sell that 3 years later to buy a country estate....

Don't buy!

Its already been done by everyone who is going to do it

Hanley

I agree with the others...

Are you buying a smaller place that you're going to move out of in 2 or 3 years, and hoping that it will increase or at least hold it's value? Don't do it, it's speculative

Is the place you're looking at buying gonna be your home for the next 20+ years? If you can genuinely say you're looking for a home, and not just a step on the ladder then you should be comfortable enough in the knowledge that it might not shoot up in price over that time, because you're not looking to make money on it.

How much is the place gonna cost?? Do you think there's the possibility of it falling in value by say 10% in the next year?? If so you could lose 30-40k over that time. While you could rent a nice 2 bed apartment for <15k. Remember, that 30-40k isn't just lost capital, it's bigger interest repayments over the term too. So by renting for a year, you could realistically save 50-70k over the life of your mortgage (I think, hopefully someone will confirm).

Finally, don't buy on what the bank will give you. Buy on what you think you can afford. If the bank's giving you 60k more than you thought you'd get, but you have to rent out a room to cover it, it's probably not the best idea. I know I wouldn't want to buy a house and then have someone I don't know move in with me and treat it like their own. But different strokes for different folks!

whizzbang

Think of it this way, you have a 2 and a 1/2 year head start on all the other buyers who are only now realizing they have to save up a deposit. Keep saving to maintain that lead and then buy a place in 2 to 3 years time with a much bigger cash pile and a much smaller mortgage. You will have your choice of properties to buy, and cash will be a huge negotiating strength.

Victor

In the present circumstances, I would want to have a substantial margin between me and discomfort and a bigger margin again before "problem".

GUDBUDD2008

Buy on what you think you can afford. If the bank's giving you 60k more than you thought you'd get, but you have to rent out a room to cover it, it's probably not the best idea. I know I wouldn't want to buy a house and then have someone I don't know move in with me and treat it like their own. But different strokes for different folks!

It is affordable at the moment no problem, with spare cash over each week
the idea of renting a room was only to feel more financially secure
so that if one of us was out of a job temporarily we would not go into
the red straight away....

And it is a 3 bed semi we would well consider staying in for the foreseeable future.... unless i win the lotto tonight...

Thanks for the replies any more opinions are appreciated
thanks...

What do you think?

seahorse

Personally I think you'd be mad to buy now OP. I think you should take the previous advice of saving for a couple more years while keeping your eye on the market. Why pay tens of thousands more than you have to?

Treehouse72

In my opinion the property crash is nearer the beginning than the end. I'd be shocked if there isn't another 30% to come off the prices of many, many poperties nationwide over the next 2 years.

Basq

The only problem I see is that as soon as houses come down to an affordable level, the huge increase in people buying will drive the market back up.

Firetrap

That won't quite happen IMHO. Prices were driven up to a certain extent by banks lending people several multiples of their income. I can't see that happening again in a hurry.

ronbyrne2005

Save save save, and buy in a year or two or three. Prices are only going one way with recession, net migration,high rates, credit crunch and general reduction in credit anyway, rocketing unemployment etc etc. You will save maybe a 100k+ on a 350k house(a house that was 350k in summer 2006)

EnoughSaid

Why buy now when properties are likely to be cheaper in the future? Also you have to remember that a recession is a very bad time to be taking on debt, unless you have a 100% secure job.

JuliusCaesar

From The Irish Indo

Monday August 11 2008
Irish house prices dropped 0.6 percent in June, capping the property market's worst first-half performance in more than a decade.

House prices fell 5 percent in the six months through June, almost twice the pace recorded a year earlier, according to an index published today by Dublin-based Irish Life & Permanent Plc. From a year earlier, prices fell 9.7 percent.

---

Whenever you buy, the equity (positive/negative) you have in the house/apt only becomes relevant if and when you sell. Did anyone predict in 2005 that houseprices would fall? NObody can foretell the future. It's really up to yourself.

Put it off for a couple of weeks or months if that might make a difference in the area you want, or a year or two years. Did the prices continue to fall at the same rate in July? in August? in September? (Is there any way of finding out, seeing actual house prices seem to be a government secret?)

You may live to regret any decision, there is never certainty!

zeus faber

I withdrew from a house sale yesterday,house prices are not going to go up in the near future so I am going to stay renting for the time being

wordcount

to buy now would be financial stupidity of the highest order.

bakerbhoy

HOLD OFF

As a seller of a house,or really now as a potential landlord you might think i'm mad telling you to stay away for the moment.With all thats going on,you may find it difficult to even get a mortgage.There is still massive downward pressure on house prices from the stock of new developements unsold, btls that the owners cannot manage to fund and the kicker in the new year when all houses will need their ber certs the , sh.te will really hit the fan. Why ?
There are thousands of new houses/apartments that should have the BER cert before sale but only a couple of hundred have been issued and when they finally get them a large portion of them will get a weak rating due to the slap em'up mentality that persisted here over the last few years. Couple that with all 2nd hand houses also now requiring the BER cert.It is entirely possible that the older houses pre boom will achieve a better rating.
NO ONE REALLY KNOWS
If you can afford to wait ,the sensible thing to do is that.

I was waitng for my house to sell to finish off a new home.I will now have to rent it for 10 to 15 years before i believe i will be able to sell

SimpleSam06

basquille wrote: »

The only problem I see is that as soon as houses come down to an affordable level, the huge increase in people buying will drive the market back up.

Then again, 40% of the activity at the top of the market was investors. When property isn't growing at double digit rates you won't see any activity from them or flippers, so almost half of your interest at the top is gone.

JJJJNR

Hmm there will always be houses available to buy, I would hold. Invest your money in nasdaq tech stocks.

JJJJNR

The irony of what I've just posted, seems that there will be a serious short fall in house building over the next couple of years.

Now might be the best time to pick up a bargain.
http://www.independent.ie/national-news/shortfall-in-newhome-construction-may-push-prices-back-up-1314098.html

http://www.boards.ie/vbulletin/showthread.php?p=57545814#post57545814

JJJJNR

JJJJNR wrote: »

The irony of what I've just posted, seems that there will be a serious short fall in house building over the next couple of years.

Now might be the best time to pick up a bargain.
http://www.independent.ie/national-news/shortfall-in-newhome-construction-may-push-prices-back-up-1314098.html

http://www.boards.ie/vbulletin/showthread.php?p=57545814#post57545814

No shortage at all. We have hundreds of thousands of vacant properties.

Who was buying all the property:
by pay
http://www.thepropertypin.com/viewtopic.php?f=4&t=1859
and
http://www.thepropertypin.com/viewtopic.php?f=4&t=2132

Why they were buying:
http://www.thepropertypin.com/viewtopic.php?f=4&t=1869

part of the reason the banks are in trouble - i.e the loans the above used to buy the properties:
http://www.thepropertypin.com/viewtopic.php?f=4&t=2281

Number of Vacant Properties:
http://www.thepropertypin.com/viewtopic.php?f=4&t=13373

dan_d

Buy if you're looking to get something that you are going to live in for the next 10/20 years.Take your time looking though, find something you're happy with, and offer below the asking price.You're actually in the strongest position of anyone in the market, you've got a decent deposit, you've nothing to sell, and you have a mortgage guarantee.They'll love you!
Having said that, consider the extra 50-60k price to be your absolute top price, worse case scenario. As in, you'd prefer not to pay that if at all possible.We got a mortgage for 100k less than we were approved for. Realistically I can see now, we couldn't have afforded to pay what we were approved for, even though it sounded fine on paper at the time. You've to factor in all your various insurances, assurances, and (if you want these things) tv,gas,ESB,etc etc. It does all add up.
If you really want to buy and you can find what you're happy with (and NOT a "starter home" for heaven's sake...media created term)
then you might aswell go for it, carefully.It took us a year to find what we bought, so take your time.

wordcount

Sorry Dan D but your wrong on this one. The economy is not going to pick up any time soon and there is only one way property is going and that is down. Buying now under any circumstances would be crazy. rent for another year that house your going to live in for 20 years will be down by 100gs.

ukdavros

I agree with Dan_D
If you want a house then buy it, Yes it may go down but they will go back up.
It doesnt matter if you dont need to sell and you can pay the mortgage.
Dont over stretch, be as certain as you can be about employment. Have a contingency plan.

I am a big believer that a lot of ths crap is started be so called experts and if not strted certainly made worse.

If somebody announced flight xx is going to crash, how many people would get on it.

Ther has been a site called Propertycrash.com that has been going years and predicting a house crash is around the corner, if you predict it long enough it will happen.

I bought houses befgore the last big crash, road through the bad times and out the other end. Friends of mine sold with negative equity, others were glad to sell when they went back up to break even point. All were kicking themselves a few years later.


many make the mistake of burrying thier heads in the sand and hoping it will go away, you cant do that you have to be pro active.

This mess was caused by financial institutions and financial experts, so how good are they.

On the other hand, keep renting the good thing about times like these is I never have a problem renting out my houses.

Its your choice
Dont overstretch
Contingency
Long term

SimpleSam06

ukdavros wrote: »

This mess was caused by financial institutions and financial experts, so how good are they.

They push made-up money around for years, and then when someone finally asks to see it they just point to the taxpayer and say "he has it! because if he doesn't we'll destroy the economy".

So in terms of being good for everyone, they are pretty crap. In terms of being good at making money for themselves, they look like they've just successfully pulled the biggest holdup in history.