Thinking of buying new house

superman24

hey guys/gals
i`m thinking of maybe gettin back onto the market but not so sure if i should hang on another while n see does houses drop more or not. one question that i have been wondering about is this, if u see a new house on market,can you bid less than the asking price with the builder even though its a brand new house?? i know with 2nd hand ones the offer gets put to the current owners but with a new one i dont know what the story is. also,i def would not be puttin in a bid anyhow that matches the current asking price as i do feel they will drop further an not only that,i jus wont have the money to pay the current asking prices at the min,jus hoping they fall bit more
thanks for any help

Senna

superman24 wrote: »

hey guys/gals
i`m thinking of maybe gettin back onto the market but not so sure if i should hang on another while n see does houses drop more or not. one question that i have been wondering about is this, if u see a new house on market,can you bid less than the asking price with the builder even though its a brand new house?? i know with 2nd hand ones the offer gets put to the current owners but with a new one i dont know what the story is. also,i def would not be puttin in a bid anyhow that matches the current asking price as i do feel they will drop further an not only that,i jus wont have the money to pay the current asking prices at the min,jus hoping they fall bit more
thanks for any help

YES you can offer less, all EA's and developers are now pricing house with the assumption that you will offer lower. As for what to offer, there are many trains of though, but 25% is usually a good starting point. have a read of the www.thepropertypin.com for a good insight.
Also prices have a long way to drop yet, when the average irish houseprice is around 100-130k, then we might be near the bottom. If you can't afford advertised prices, then i would hold off for another year or so. Interest rates are low, but you need to allow for a 3-5% interest rate increase and see if you can afford it then.

jetski

Senna why do you think the average price should be 100k to 130k before were near the bottom?

OP - id take senna's post with a large pinch of salt as a decent 3 bed house will cost about 250k to build and thats without land.

Look at other european citys and you will see property is generally expensive.

Look at anywhere in europe and see if you can buy a house for 100k :rolleyes:

Back to your question.... you can definitly offer less than the asking. you will get more off the asking now than you will save if you wait for the natural price to decline and have more choice of propertys, thats my advice. the MAJORITY of people on forums making crazy claims havent a clue what their talking about and dont own propertys themselfs.

Senna

Senna wrote: »

YES you can offer less, all EA's and developers are now pricing house with the assumption that you will offer lower. As for what to offer, there are many trains of though, but 25% is usually a good starting point. have a read of the www.thepropertypin.com for a good insight.
Also prices have a long way to drop yet, when the average irish houseprice is around 100-130k, then we might be near the bottom. If you can't afford advertised prices, then i would hold off for another year or so. Interest rates are low, but you need to allow for a 3-5% interest rate increase and see if you can afford it then.

Id tend to agree with this post, property prices are no-where near bottom imo. The average house in about 250k now i think they will bottom out at 150k or below

MG

jetski wrote: »

Senna why do you think the average price should be 100k to 130k before were near the bottom?

OP - id take senna's post with a large pinch of salt as a decent 3 bed house will cost about 250k to build and thats without land.

Look at other european citys and you will see property is generally expensive.

Look at anywhere in europe and see if you can buy a house for 100k :rolleyes:

Reykjavik?

The ISEQ is down 70%, Bank shares are worth 5% of their peak, unemployment has doubled and by some estimates will double again, development land prices have fallen through the floor, all the builder who were so expensive are on the dole, taxes and levies are going up, disposable income is going down, credit is difficult to get, housing market is oversupplied, emmigration is likely to increase and we are in a massive global recession.

Very difficult to call the bottom of the market but 100-130k is by no means impossible.

No reason at all to buy until some of the bad news stabilises or improves.

There is absolutely no reason to buy unless you are getting a 50-80% discount on peak prices.

jetski

Deal with each house on a case by case basis some are going to hold their value very well others will drope like a stone.

This is a downturn and not permanent by anymeans anyone with half a brain will not sell a house for half of what they paid for it.


did you watch the late late last night?

MG

jetski wrote: »

Deal with each house on a case by case basis some are going to hold their value very well others will drope like a stone.

This is a downturn and not permanent by anymeans anyone with half a brain will not sell a house for half of what they paid for it.

Not so, there are several reasons why houses might be sold for under their value, mainly cash flow or Bank pressure related.

I didn't think anyone was still calling it a downturn. I thought the coversation has turned to whether it was a recession or a depression.

jetski wrote: »

did you watch the late late last night?

Nope - what was on it?

gurramok

2003 - Posters who have opinions like Jetski's: You'd be mad to say that prices will double within 3 years.
2006 - oops!

Point being, anything is possible. They will go down far as we're into a long recession.

Jetski wrote:

the MAJORITY of people on forums making crazy claims havent a clue what their talking about and dont own propertys themselfs

And you're a recent buyer who posted about their purchase, no wonder you are saying

anyone with half a brain will not sell a house for half of what they paid for it.

MG

Apart from falling house prices, there is another aspect that the OP should consider.

Buying a house limits your flexibility. We are in a recession, so you are stuck with your house if you lose your job. Your options on moving or emigrating to get work are limited, your ability to downsize your monthly outgoings by moving to cheaper rented accomadation are limited. If your family expands or prefer to move to a different area - tough.

A house is a liability at the moment, not an asset.

jetski

gurramok wrote: »

2003 - Posters who have opinions like Jetski's: You'd be mad to say that prices will double within 3 years.
2006 - oops!

Point being, anything is possible. They will go down far as we're into a long recession.



And you're a recent buyer who posted about their purchase, no wonder you are saying

I totally agree, read my first post.

Yes i did buy a house, i got a serious chunk off the already low asking price on a savage looking house built to the highest of standards 12 miles from the captial city center, its now cheaper for me to own the house than it would be to rent it by far and its getting cheaper and cheaper to own every month that goes by, we have another .5% ecb rate on the way and that wont be the end of the cuts mark my words. in 5 years time ill own the house outright so there is really good value at the moment i dont care what anyone says.

jetski

MG wrote: »

Apart from falling house prices, there is another aspect that the OP should consider.

Buying a house limits your flexibility. We are in a recession, so you are stuck with your house if you lose your job. Your options on moving or emigrating to get work are limited, your ability to downsize your monthly outgoings by moving to cheaper rented accomadation are limited. If your family expands or prefer to move to a different area - tough.

A house is a liability at the moment, not an asset.

It doesnt limit you flexibility one bit. you are stuck with your house if you loose your job but the majority of people who lost their jobs have done so already as everyone knows january was marked with an X

why cant you rent the house out and in turn rent some where smaller yourself?

I myself will be going travelling for a few years and the house will be rented out for me to return to, I wont be arriving back in the country homeless or having to go frantically looking for somewhere to rent.


Ill be off in some jungle and someone will be getting up and going to work everyday to buy my house for me

Freddie59

superman24 wrote: »

hey guys/gals
i`m thinking of maybe gettin back onto the market but not so sure if i should hang on another while n see does houses drop more or not. one question that i have been wondering about is this, if u see a new house on market,can you bid less than the asking price with the builder even though its a brand new house?? i know with 2nd hand ones the offer gets put to the current owners but with a new one i dont know what the story is. also,i def would not be puttin in a bid anyhow that matches the current asking price as i do feel they will drop further an not only that,i jus wont have the money to pay the current asking prices at the min,jus hoping they fall bit more
thanks for any help

House prices have a LONG way to go yet. Economic fact. You should check these sites before making ANY decision:

www.thepropertypin.com

www.irishpropertywatch.com

and this one is INVALUABLE:

www.treesdontgrowtothesky.com

Check the charts on it and let someone try and convince you that prices aren't in freefall. You'd be nuts to buy now unless you get an absolute bargain.

DublinDilbert

jetski wrote: »

It doesnt limit you flexibility one bit. you are stuck with your house if you loose your job but the majority of people who lost their jobs have done so already as everyone knows january was marked with an X

This does not make sense, or reflect what's actually happening. Lots of people are being made redundant, but aren't on the live register and will not be for 6 to 9 months. Take dell for example, how many workers have finished up and gone on the live register? I would say none, the'll be so busy building stock up for the transition period to the new factory. They will be let go in due course. Look at Thursday, Erricson letting 300 engineers go, they'll be on the live register in 9 months time... The increases your seeing on the live register are the results of redundancy announcements 9->12 months ago.

jetski wrote: »

Ill be off in some jungle and someone will be getting up and going to work everyday to buy my house for me

Do you know how difficult it is to rent a house these days? and how much has been shaved off rents? Also i know for a fact a large developers are kitting out large numbers of unsold appartments to put on the rental market. Again you might rent it today (all be it at a reduced price), but when that lease is up you might be lucky to fill it at all, the way things are going....

MG

jetski wrote: »

I totally agree, read my first post.

Yes i did buy a house, i got a serious chunk off the already low asking price on a savage looking house built to the highest of standards 12 miles from the captial city center, its now cheaper for me to own the house than it would be to rent it by far and its getting cheaper and cheaper to own every month that goes by, we have another .5% ecb rate on the way and that wont be the end of the cuts mark my words. in 5 years time ill own the house outright so there is really good value at the moment i dont care what anyone says.

Depends what price you bought at. Unless you bought at about 50-80% below the peak then you are losing in the region of 2k per month of the value of an average house. So unless you were paying rent of > 2k (for av house) + the interest cost, then you are more than likely losing out.

You seem to be optimistic on house prices so my feeling is that you didn't get 50-80% off the peak price, correct me if I am wrong.

Most people compare the rent to the mortgage payment when comparing whether it is better to rent or buy, but this is cash flow only, not real cost.

MG

jetski wrote: »

It doesnt limit you flexibility one bit. you are stuck with your house if you loose your job but the majority of people who lost their jobs have done so already as everyone knows january was marked with an X

Brian Cowan does not agree with you, nor I suspect does anyone else in the country. The anticipated is that number unemployed is expected to exceed 400,000.

Let's not mislead the OP, there is a very serious issue at the moment with tieing yourself to an illiquid depreciating asset. Depending on the OP's circumstances, they may be better off with the 20-30k in their backpocket to give them maximum flexibility.

gurramok

jetski wrote: »

I totally agree, read my first post.

Yes i did buy a house, i got a serious chunk off the already low asking price on a savage looking house built to the highest of standards 12 miles from the captial city center, its now cheaper for me to own the house than it would be to rent it by far and its getting cheaper and cheaper to own every month that goes by, we have another .5% ecb rate on the way and that wont be the end of the cuts mark my words. in 5 years time ill own the house outright so there is really good value at the moment i dont care what anyone says.

Fair play to you if you did your sums.

Firstly, those ECB cuts are really only beneficial to those on trackers(no longer available) more so than variable mortgages by couple of percent or so.

Secondly, they are temporary cuts. Wait until the global economy picks up again, anything from 1-5yrs and rates will be back to where they were hence keep an eye on your ability to pay.

Thirdly, we only take your word than its cheaper to buy than rent on your property as its not the case 'mostly' elsewhere.

Lastly, where is this good value? I've asked numerous times in threads and not one has given examples!:rolleyes:

johnnyskeleton

I'd consider purchasing property at the moment, so to rebutt what jetski has said I'll explain my thinking.

First, I would only ever purchase at a price that I think is reasonable. This means that I wouldn't buy somewhere for more than I could realistically sell it for in a few years time, and also I wouldn't buy somewhere if the repayments would cause me hardship.

Second, I would only ever purchase a property that I would be prepared to live in in the medium to long term.

Third, I would only ever purchase a property if I believed my income to be secure and that I wanted to live in Ireland long term.

So what do I think is reasonable? Well historical norms suggest that property sells for on average 3-5 times the average wage. Common sense dictates that the higher your income the better the property you should be able to afford. So someone on average wages should be able to afford the average property, someone on above average wages should be able to afford an above average property. It follows therefore that someone on the average wage of (who knows what it is now, say €30k) should be able to afford the average house (say alright 3 bed house or nice 2 bed apartment). So the average person should be able to buy the average house for €120-150k. This is what I consider to be a good if rough estimate of the disposal price of an average property. So this is the benchmark. As regards the other point, I would only enter a mortgage that would not cause me hardship, so that would be a 20 year mortgage of 85-90% LTV and in any event no more than 1/3 of my net monthly income. So this would suggest a mortgage of between €102k and €135k and my monthly mortgage should not exceed €717, which according to AIB (currently the lowest variable rates available) would cap any mortgage at €127k. So someone on the average wage would need to save up €14-23k as a deposit.

On the Second issue, I don't want to live in a tiny shoebox apartment, or one of those dank Laim Carroll early 90s efforts. Nor do I want to live a long way from civilization/work.

On the Third issue, there are many people currently facing unemployment (it might even be fair to say that most people face at least some job uncertainty) and in those circumstances it would not be prudent to purchase a property.

So these are the criteria, and I would need to be in a position whereby my job is secure, there is a property that I would like to live in and I am able to afford to live there on the criteria above. But, you might argue, that is not the reality. The reality is that you struggle for years to pay off a very high mortgage in a property you don't really like on the basis that you will one day trade up. However I say to you that that was the old reality, which now seems like a collective delusion. The new reality is that a property is only worth what someone would pay for it, and given the factors above which most people either subscribe to or else have thrust upon them by their lender people are not prepared to pay anything near what was asked in 2006. Furthermore, given that there may well be mass emmigration and over supply of property, there is every possibility that property will settle at less than this level.

The estate agents are fond of saying to people that we have had 40% drops and that now is the time to buy. If that is the case, then I say fine, I'll look at a property and tell them what I think it's worth. They can accept or reject it, but they will do so knowing that if they reject my offer, they are unlikely to get any realistic offer above mine. They can either hold out for someone with more money than sense, or they can face reality.

Senna

jetski wrote: »

Senna why do you think the average price should be 100k to 130k before were near the bottom?

OP - id take senna's post with a large pinch of salt as a decent 3 bed house will cost about 250k to build and thats without land.

Look at other european citys and you will see property is generally expensive.

Look at anywhere in europe and see if you can buy a house for 100k :rolleyes:

Back to your question.... you can definitly offer less than the asking. you will get more off the asking now than you will save if you wait for the natural price to decline and have more choice of propertys, thats my advice. the MAJORITY of people on forums making crazy claims havent a clue what their talking about and dont own propertys themselfs.

If you read my post you will see i say the Average Irish House Price, I didn't say the average price of a 3 bedsemi in Dublin. The average price of a house in Ireland is €261,573 (dec 2008) that includes every house nationally, so every back-water village is included also.
So yes i do believe that the average house price will be around 100-120K and i will be proved right, the market will overshot on the way down and the bottom will be lower than a stable price level.
On that note i know very little of house prices in Dublin, but in my town in the (15k people) North West, the price of a 3 bed semi is about 130k (selling not advertised). I would say that will drop to around 80k at the bottom and then level out at 100k. By traditional pricing, a Dublin house is normal 50% dearer, so i would say 150K for a 3 bedsemi.


Also, who say it would cost 250k to build a 3 bed semi?? at bubble rates maybe (i would guess less), but at the moment 250k is no way realistic. Again looking at my area, a 4 bed detached is costing about 50e per sq ft and that a high finish. So a 3 bed semi should be alot less than 60k (1200sq ft), you can add more for Dublin of course, but not an extra 190k.

Jetski, from what i see of your posts you give very little to back up your arguments, bar a low interest rate that wont be low for ever, a 2006 attitude that there's great value out there and that, if you dont buy now, you'll miss out. Buy now if people want, it can be cheaper than renting, but don’t be deluding them that the markets near the bottom, it's nowhere near it. Are you trying to make yourself feel better about your own purchase?

And just to add, i own my own house and i wont ever be buying again, i'm not trying to drag down the market so i can get a house cheaper, i'd prefer people buy a house with correct information about the market and not make a mistake that they'll be paying for for the next 25/30/35/40 years.

jetski

when did i ever say the markey has hit bottom?

Senna

jetski wrote: »

when did i ever say the markey has hit bottom?

So i write a long enough message and your reply is questioning something i did not say. That says alot for your argument. Please re-read the message.

jetski

Senna wrote: »

but don’t be deluding them that the markets near the bottom

Re read your own message.

In the past you could buy a house for 5 times a salary its no secret, but When you could there was only one earner per household, bank interest rates were as high as 22.5% + and ireland wasnt even on the world map. Economics are not simple and dont revolve in perfect circles its not going to be the way it was in the past.

johnnyskeleton

jetski wrote: »

Re read your own message.

In the past you could buy a house for 5 times a salary its no secret, but When you could there was only one earner per household, bank interest rates were as high as 22.5% + and ireland wasnt even on the world map. Economics are not simple and dont revolve in perfect circles its not going to be the way it was in the past.

The problem with this thinking is that if you spend whatever the bank will give you to buy property instead of making a rational decision as to how much it is worth, you end up with a bubble.

Look at it like this, and lets pretend that there is no inflation or change in wages between 1980 and 2000. Let's say the average wage is €20k and a loaf of bread (as representative of all other goods) costs €1 throughout this entire period.

So in 1980 A buys a property for €100k which is 5 times his salary.
In 2000 A & B buy the exact same property for €200k which is 5 times their combined salary. The house isn't worth any more than it was in 1980, but the couple are working twice as hard to get the same thing.

In another example, let's say that interest is 20% so your monthly repayment on a €100k mortgage is €1698 (over 20 years). If interest rates drop to 10% people would pay €962 for the same mortgage, but the problem is that instead of being able to buy the house for €100k the price rises to €176k so that the monthly mortgage is €1698. The difficulty here is that people look at the short term monthly payment for a mortgage, when they should look at the price they are paying on a long term basis. Lower interest rates should mean that people pay off their mortgage quicker instead of people paying more for the same property.

anyone who bought a house in the last 5 years must be kicking themselves. Talk about being taken to the cleaners

jetski

johnnyskeleton wrote: »

The problem with this thinking is that if you spend whatever the bank will give you to buy property instead of making a rational decision as to how much it is worth, you end up with a bubble.

Look at it like this, and lets pretend that there is no inflation or change in wages between 1980 and 2000. Let's say the average wage is €20k and a loaf of bread (as representative of all other goods) costs €1 throughout this entire period.

So in 1980 A buys a property for €100k which is 5 times his salary.
In 2000 A & B buy the exact same property for €200k which is 5 times their combined salary. The house isn't worth any more than it was in 1980, but the couple are working twice as hard to get the same thing.

In another example, let's say that interest is 20% so your monthly repayment on a €100k mortgage is €1698 (over 20 years). If interest rates drop to 10% people would pay €962 for the same mortgage, but the problem is that instead of being able to buy the house for €100k the price rises to €176k so that the monthly mortgage is €1698. The difficulty here is that people look at the short term monthly payment for a mortgage, when they should look at the price they are paying on a long term basis. Lower interest rates should mean that people pay off their mortgage quicker instead of people paying more for the same property.

Its not that black and white, interest rates now are just over 3% there are double the amount of jobs in ireland now than there were in the 80/90s its the same reason a 70sqm appartment can cost €2 million.

johnnyskeleton

jetski wrote: »

Its not that black and white, interest rates now are just over 3% there are double the amount of jobs in ireland now than there were in the 80/90s its the same reason a 70sqm appartment can cost €2 million.

Ok. So if more jobs means higher prices the fact that we are currently seeing massive unemployment and reductions in pay/hours/overtime suggests that house prices will fall. QED I suppose.

You are also ignoring that there were up to 90k new properties being built every year up to 2006 so there is a massive oversupply of houses. Certainly there are a lot more houses around than there were in the 80s/90s, perhaps double the amount, perhaps more so. If there are double the jobs and double the supply, then the net effect is equal.

So in the exact same way as prices went up by ridiculous amounts during the bubble, so too will they drop by ridiculous amounts during the bust. It really is that simple, and stating it is more complicated does not make it so.

Freddie59

Look at this week's report. Do people still want to argue that there are little or no price drops?

www.treesdontgrowtothesky.com

Senna

rarnes1 wrote: »

anyone who bought a house in the last 5 years must be kicking themselves. Talk about being taken to the cleaners

For most people a house is a home not a get rich quick scheme, just because you paid more a few years ago than you could buy it now (or less in years to come), does not make it a huge mistake. If you have had a roof over your families head for the last X years, the decrease might be well worth what the home has given you. If you haven't lost your job and can repay the mortgage, then many people wont be kicking themselves.

Saying that, a lot of people bought apartments and small houses that are no longer suitable for their needs, the mythical Property Ladder and getting your foot on it NOW was just a PR exercise that thousands bought into.

mayblue

Freddie59 wrote: »

House prices have a LONG way to go yet. Economic fact. You should check these sites before making ANY decision:

www.thepropertypin.com

www.irishpropertywatch.com

and this one is INVALUABLE:

www.treesdontgrowtothesky.com

Check the charts on it and let someone try and convince you that prices aren't in freefall. You'd be nuts to buy now unless you get an absolute bargain.

thank you for the links.... they are good!!!

Freddie59

mayblue wrote: »

thank you for the links.... they are good!!!

You're welcome. They are some eye-opener.:)

jetski

well there not that good given both irishpropertywatch.com and treesdontgrowtothesky.com contradict each other

johnnyskeleton

jetski wrote: »

well there not that good given both irishpropertywatch.com and treesdontgrowtothesky.com contradict each other

DNG say prices have fallen 40%. PTSB/ERSI say they have fallen 15%. As they contradict each other, I choose to ignore them and assume that prices have gone up, let's say 25% last year. No wait, lets say 24%, that's more believeable.

Freddie59

jetski wrote: »

well there not that good given both irishpropertywatch.com and treesdontgrowtothesky.com contradict each other

Have you even read the weekly charts on www.treesdontgrowtothesky.com

Do you mind if I ask you if you are involved in the construction industry in any way, shape, or form?:)

ntlbell

Freddie59 wrote: »

Have you even read the weekly charts on www.treesdontgrowtothesky.com

Do you mind if I ask you if you are involved in the construction industry in any way, shape, or form?:)

no he's not, but he has bought a house recently

AARRRGH

jetski wrote: »

there is really good value at the moment i dont care what anyone says.

Yes, there is good value at the moment when compared to two years ago, but there is going to be even greater value next year, the year after, and so on.