Been waiting for prices to fall further..going to buy now..am I mad?

TheCityManager

Ive been sitting on the fence waiting and watching as prices fall and fall ever since I sold my last house a year and a half ago..

Ive been renting a lovely 3 bed semi in south dublin...in need of much modernisation mind you.

The landlord has now offered that I buy the house if I wish..I've agreed a great price even in todays market (lowest by far in the area ...but it does need to be gutted and redone..)

But I do wonder am I mad?
Should I wait till next year and save even more?
Will I be disgusted if other houses in area are going for say 50k less next year?

Any advice?

Gurgle

TheCityManager wrote: »

Will I be disgusted if other houses in area are going for say 50k less next year?

Trust nobody who claims to know the answer to that question.

My opinion: Now is a good time to buy a home, a reasonable time for investment, a stupid time for speculation.

tesslab

Plus with so many people out of work ya could prob get work done at reasonable price. If you like the area and are happy there i say why not. Good luck.

meditraitor

Trust no-one as no-one has the answer but I would say HOLD YOUR HORSES for another 12 months and then you will get a real bargain......

TheCityManager

meditraitor wrote: »

Trust no-one as no-one has the answer but I would say HOLD YOUR HORSES for another 12 months and then you will get a real bargain......

This is what I was thinking too...but we'll be fceked out of current house in May if we dont buy as landlord wants to sell...I did offer him 30k less than he wanted ...and he accepted..much to my surprise....:)

I dont really want to drag kids off to another rented house for a year and then another when we buy..........however I do reckon prices will continue to slide....

decisions decisions.......:(

meditraitor

TheCityManager wrote: »

This is what I was thinking too...but we'll be fceked out of current house in May if we dont buy as landlord wants to sell...I did offer him 30k less than he wanted ...and he accepted..much to my surprise....:)

I dont really want to drag kids off to another rented house for a year and then another when we buy..........however I do reckon prices will continue to slide....

decisions decisions.......:(

Rent is going down rapidly, you should be able to rent a 3 bed anywere outside of the city centre for 1200 or less come May. Thats €14,600 a year.

If you look at the price of a 3 bed semi dropping by 15-25%(speculation but why not) by May next....
a 20% reduction in prices (300,000- 3 bed semi)will save you 60,000

So all in all you should save your family a good 45,000 yoyos by renting for another year.Thats college for one of you little ones!

If I am living in dream land and houses are not going to fall by 20% in the next 15 months then ignore this post.

I can tell you one thing,,,,,, Prices will not go up in the next 15months so its fair to say it can do you no harm to sit on the fence a while longer.

And as for your landlord- any money says he will not put you out come May..... You are a paying tenant and that is a valuble commodity for anyone with property.

TheCityManager

meditraitor wrote: »

Rent is going down rapidly, you should be able to rent a 3 bed anywere outside of the city centre for 1200 or less come May. Thats €14,600 a year.

If you look at the price of a 3 bed semi dropping by 15-25%(speculation but why not) by May next....
a 20% reduction in prices (300,000- 3 bed semi)will save you 60,000

So all in all you should save your family a good 45,000 yoyos by renting for another year.Thats college for one of you little ones!

If I am living in dream land and houses are not going to fall by 20% in the next 15 months then ignore this post.

I can tell you one thing,,,,,, Prices will not go up in the next 15months so its fair to say it can do you no harm to sit on the fence a while longer.

And as for your landlord- any money says he will not put you out come May..... You are a paying tenant and that is a valuble commodity for anyone with property.

I actually think that prices may slump by a LOT more than 20% - I think they could go 50% more....

Budget next month will be TOUGH and will further drive down the economy..plus I'm public service so already have income and pension levies to deal with...

Problem is that gf wants the house (badly..) so Ive made landlord a low offer and the fceker accepted....I thought be would refuse...

So looks like I'm buying....:(

meditraitor

TheCityManager wrote: »

Problem is that gf wants the house (badly..)

So looks like I'm buying....:(

Some things money cant buy :P As long as the Misses is happy........

TheCityManager

meditraitor wrote: »

Some things money cant buy :P As long as the Misses is happy........

So true
:rolleyes:

Akrasia

Gurgle wrote: »

Trust nobody who claims to know the answer to that question.

My opinion: Now is a good time to buy a home, a reasonable time for investment, a stupid time for speculation.

What do you base that opinion on?

Don't trust people, but you should listen to the reasons for why they hold such an opinion and then decide accordingly.

Me, I think that house Prices still have a very long way to fall to reach the bottom of the market. There are still a huge number of empty properties, the Irish population is no longer growing at the rate it was a few years ago(it may even be declining)
Historically average house prices have remained at about 2 to 4 times the average salary, this would put them at about 130- 160k for average 3- 4 bed semi and significantly less for houses in less desirable locations or in need of refurbishment.

Market bubbles also tend to overshoot on the way down so if you are prepared to wait, you might be able to pick up a genuine bargain in a year or two. (despite the media focus on the recession, we have yet to enter the panic phase of the bust, people are still sitting on empty properties hoping that the market will turn, and banks are still rolling over debt for developers. The panic phase will probably start when banks start reposessing BTL houses or assets of developers and selling them off at auctions for whatever they can get.
This is inevitable, the banks need liquidity, they can't keep rolling over debt and many developers can't even meet the interest repayments on their loans, the banks are in no position to become property developers or professional landlords, so they'll offload the properties and get the taxpayer to cover the bad debts (aren't we very generous)

If I were you, I would wait another year or two when you will probably be given the choice of a very large number of properties at a lower price.

jmayo

TheCityManager wrote: »

This is what I was thinking too...but we'll be fceked out of current house in May if we dont buy as landlord wants to sell...I did offer him 30k less than he wanted ...and he accepted..much to my surprise....:)

I dont really want to drag kids off to another rented house for a year and then another when we buy..........however I do reckon prices will continue to slide....

decisions decisions.......:(

Sounds like the landlord wants to cut and run, he may be overstretched and by sounds of it he reckons he is getting good deal.
I agree with meditraitor and i think prices are going to go much lower.
There is nothing there to point to anything but lower property prices and this recession we are in will soon become a depression when the full effects are felt.
It is a pity emotion has come into it, worse thing that can happen when buying property. It tends to throw logic a curve ball.
Maybe landlord twigged this and said that he was putting it on the market in order to up the ante and get you to buy ?
Anyway good luck with the purchase.

EDIT: have you signed anything ? If not try and knock a few more quid off.
Of course now I will be pillored for recommending somebody gazunders, but it is money that this guys family could do with and being realistic the landlord will be looking at even less of an offer in a years time.
Call me cynical but the one thing I have learned from our major government party over the last 12 odd years is look after yourself.

TheCityManager

jmayo wrote: »

Sounds like the landlord wants to cut and run, he may be overstretched and by sounds of it he reckons he is getting good deal.
I agree with meditraitor and i think prices are going to go much lower.
There is nothing there to point to anything but lower property prices and this recession we are in will soon become a depression when the full effects are felt.
It is a pity emotion has come into it, worse thing that can happen when buying property. It tends to throw logic a curve ball.
Maybe landlord twigged this and said that he was putting it on the market in order to up the ante and get you to buy ?
Anyway good luck with the purchase.

EDIT: have you signed anything ? If not try and knock a few more quid off.
Of course now I will be pillored for recommending somebody gazunders, but it is money that this guys family could do with and being realistic the landlord will be looking at even less of an offer in a years time.
Call me cynical but the one thing I have learned from our major government party over the last 12 odd years is look after yourself.

Oh God....I've got to get myself out of this...........;)

Akrasia

TheCityManager wrote: »

Oh God....I've got to get myself out of this...........;)

Another thing to consider is the fact that your current home needs renovation which can be just as disruptive for your family as moving to a different rental property...... (depending of course on the amount of work you intend to do)

AARRRGH

If you remember watching the original Star Trek, you'll remember Dr. Spock was a relatively cold individual. He would remove emotion from his decision making and always choose what was the most logical option.

If you were to ask Dr. Spock for his opinion, what would he say? I'm pretty sure it would go something like this:

It makes no financial sense to buy now. The longer you put off buying, the more money you will save. Current economic conditions suggest this rule will apply for a number of years. Long term economic conditions suggest the current value of your home will never be seen again. Therefore you are setting yourself up for a life of negative equity if you buy now. If you are certain you won't need to sell within perhaps the next 6 - 10 years, this won't make much of a difference, but if you believe you might need to sell before then, you should not buy now.

Your girlfriend is being emotional. She is not thinking logically. It does not make sense to let your emotions do your decision making when you are spending hundreds of thousands of euros.

You need to tell her to cop on. If she won't listen, set your phaser to stun...

EKRIUQ

The property market is really on a downward spiral but there is grades of seller's,
(1) People who are in no panic of selling and still looking for crazy prices but don't really care because they've nothing planned and are still testing the market,
(2) The people who are very eager to sell but have to get a figure to pay what ever they had planned with their money (I'm guessing the OP landlord is in this situation) and then you have
(3)The desperate! The developers, the people who over stretched them self’s and then lost their jobs.

And at the moment theirs no hope in the market because theirs very little buyers in the market and the desperate are slashing prices as much as they can but no bank will let them sell in negative equity unless their sure they’ll get their money back through other ways. Thinking houses that were €350,000 selling for €120,00-€150,000 is wishful thinking but I don’t think that will happen not because people would just get re-possessed, bad credit and prefer live with that than having to repay bank a debt of €100,000 for the next 30 years.

At the moment advertised prices mean nothing because it’s a more take it of leave it market.

TheCityManager

House needs complete renovation..Im talking everything plus we're gonna add an extension and an attic room...we're talking 60k+....

Now here's the thing...we're getting it for 280k so plus 60k that 340k for a house that is exactly as we want it..exactly...

other house in the estate went on market today at 400k and that has no extension nor attic room and needs a lot of work too...

so am I still mad ?

AARRRGH

TBH I would stop looking at what houses are selling for today. Houses are still incredibly overpriced.

If you want the house, and you plan on living there for years, by all means go for it. But it doesn't change the fact that it is a bad financial decision.

Personally I would wait a few years as there is only a small psychological difference between owning and renting.

jetski

aarrrgghhh so you own a home?

not knowing too much about the house Id recond your not getting a bad deal... think how much youl pay on rent while your waiting so you can deduct that from any saving your going to risk makeing. The Usa has passed a one trillion dollar recovery plan and will see europe recover which means the interest rates will be going back up. if you can afford the house and you fix your rate youd be doing well.

TheCityManager

jetski wrote: »

aarrrgghhh so you own a home?

not knowing too much about the house Id recond your not getting a bad deal... think how much youl pay on rent while your waiting so you can deduct that from any saving your going to risk makeing. The Usa has passed a one trillion dollar recovery plan and will see europe recover which means the interest rates will be going back up. if you can afford the house and you fix your rate youd be doing well.

Did I mention that I can buy the house with no mortgage?

Will need to borow for renovations though :rolleyes:

jmayo

jetski wrote: »

aarrrgghhh so you own a home?

not knowing too much about the house Id recond your not getting a bad deal... think how much youl pay on rent while your waiting so you can deduct that from any saving your going to risk makeing. The Usa has passed a one trillion dollar recovery plan and will see europe recover which means the interest rates will be going back up. if you can afford the house and you fix your rate youd be doing well.

And seen as you don't know the hosue how de f*** would you know if he is getting a good deal or not ?
Ah yes the old rent money is dead money argument :rolleyes:
Wondered when that would appear. jetski you win the prize
BTW using your definition paying more today than tomorrow for the house wouldn't it also be seen as a waste of money ?

Glad you know the one trillion dollars will see US and by extension Europe recover. Now which part of Europe recovering are we talking about here, the giant export driven manufacturing German economy or the Irish borrow and build economy ?

TheCityManager wrote: »

Did I mention that I can buy the house with no mortgage?

Will need to borow for renovations though :rolleyes:

That is a major plus, but you need to take a few things into account when making this decision.
Will you be happy spending more for your house than the guy who buys a few doors down in a few years for 40% less ?
That can eat at a person because they feel they got bad value for their money.
Do you plan on staying there real long term say 15/20 years ?
Would you have any other pressing uses for your money ?

Oh and please don't take notice of what hosue down the road is advertised at, 400k is bullsh** (pardon my French) and probably won't be achieved.
Because of the way our market works and data protection we are not seeing the real sales prices and they are much lower than the advertised ones or sale agreed ones.

Fighting Irish

lol

Buying while prices are dropping?
Sounds like a good plan

Fighting Irish

TheCityManager wrote: »

House needs complete renovation..Im talking everything plus we're gonna add an extension and an attic room...we're talking 60k+....

Now here's the thing...we're getting it for 280k so plus 60k that 340k for a house that is exactly as we want it..exactly...

other house in the estate went on market today at 400k and that has no extension nor attic room and needs a lot of work too...

so am I still mad ?

Yes, cos you're comparing a price to what you are use to over the past few years

TheCityManager

Fighting Irish wrote: »

lol

Buying while prices are dropping?
Sounds like a good plan

This post actually makes the most sense............right...gotta get out of it .. wish me luck...:rolleyes:

TheCityManager

Thanks for all the replies people...

The real problem here is that whilst I know it would make huge financial sense to wait..the current house is a **** hole, kids want their own rooms etc, we want somewhere we're not ashamed of..so its either rent bigger elsewhere or buy now....
Also the uncertainty of it all ..renting, not being able to do up a house (which we both love) not being able to settle in an area etc can be very wearing...
we've both lived at many addresses over th elast few years....it feels like time to settle down (finally..)
the kids are not mine, so I dont have a say there and she doesnt want to move them again..(there has been a few moves over last few years..)

Hard talking to be done at the weekend methinks :rolleyes:

jetski

jmayo your a fool go back to bed and stay there.

OP its not clear what your deciding to do?

jmayo

jetski wrote: »

jmayo your a fool go back to bed and stay there.

OP its not clear what your deciding to do?

Is that your usual reposnse when somebody queries your great insight into the property market and our economic outlook.
Hell with that attitude you are qualified to be in government :rolleyes:

PS I wish I could go back to bed, but sadly I have to work and no it's not to pay for a once overpriced pile of bricks

Akrasia

best of luck, but i you think about, a total renovation of a house would be just as disruptive as moving (and you might have to move while the work is going on anyway)
rents are falling at the moment and for the price of a mortgage on an average sized house, you could rent a very nice property for a year while you take the time to find a home with much more potential at a much lower price where you could live almost rent free if you put the 260k into a high yield deposit account (state secured) (10400k in interest on 260k at 4%)

Theboinkmaster

TheCityManager wrote: »

House needs complete renovation..Im talking everything plus we're gonna add an extension and an attic room...we're talking 60k+....

Now here's the thing...we're getting it for 280k so plus 60k that 340k for a house that is exactly as we want it..exactly...

other house in the estate went on market today at 400k and that has no extension nor attic room and needs a lot of work too...

so am I still mad ?

In my opinion - yes.

Property still has to fall significantly, anywhere from 5 to 50% in my opinion, depending on circumstances (location, build quality, house or apartment etc).

I believe that a 3 bed semi D in leafy south dublin asking today €400k will mostly likley drop to €200k over the next 3 to 5 years. That would still be 5 times the average salary and don't forget salaries are falling at the moment....

You'd get it now for €280k but ask yourself how you'd feel if I told you for certain that in 2 years time you could get it for €200k - does €80k mean much to you as it does to me!

Best of luck - you did the right thing coming on here and asking Qs. For more information do some research on www.thepropertypin.com and associated links.

dny123456

if it needs complete gutting, you will have to move out for a while anyway. you cant live in a building site and it always takes longer than you would expect. How much are you paying on rent?

johnnyskeleton

TheCityManager wrote: »

Any advice?

Yes, work it out for yourself.

Ask yourself:

1) Is my job secure?
2) If I were to sell the house on after 2-5 years, will I get back most/all/more than I put into it?
3) Can I easily afford the repayments & the cost of refurbishment?
4) Do I plan to move abroad or move somewhere else in Ireland in the near term?
5) Can I buy a similar property for less and/or in a better state of repair?
6) If I buy and the price goes down, will I accept that loss on the basis that I really want to live in this particular house?
7) Do I have enough for a deposit and can I get the rest from a bank?

If the answer to all of the above is yes, then I see no reason why you shouldn't buy now. Obviously if you think you can get a better price by waiting, then it's up to you whether you can wait that bit longer and get a better price.

However, if the answer to any of the above is no, while it doesn't mean that you shouldn't buy, it does mean that you should think very carefully before buying and realise that you are taking a gamble. For example, I wouldn't buy at the moment unless I could say with reasonable certainty that in 2-5 years time if I had to sell it, I would get back 95% or more of the purchase price. We are currently experiencing wage deflation, and we are also heading back to the more reasonable valuation of 3.5 times your income plus 1x your partner's to buy somewhere. This means that the average price of a house could fall to €150k or less. I'm not saying this is definately going to happen, but its on the cards. In the interest of fairness I should also say that we could be facing Zimbabwae style hyperinflation, in which case the price of an average house could go up to €346,500,000,000. So keep your ear to the ground listening to international trends, and see where you are. Try not to rely totally on the monthly mortgage payment as this can be quite misleading.

newestUser

Theboinkmaster wrote: »

In my opinion - yes.

I believe that a 3 bed semi D in leafy south dublin asking today €400k will mostly likley drop to €200k over the next 3 to 5 years. That would still be 5 times the average salary and don't forget salaries are falling at the moment....

While I agree that comparing the average salary/value ratio would lead one to conclude that houses are overpriced, I'd argue that salaries are higher than average in south Dublin, and I also think that historical salary/price ratios are somewhat redundant today because Ireland is much wealthier. Lots of people have parents who are willing to give them 10000's of euro towards their house.

johnnyskeleton

jetski wrote: »

jmayo your a fool go back to bed and stay there.

OP its not clear what your deciding to do?

It's good to see that no one listens to jetski anymore, and clearly the OP is deciding not to listen to him too.

jmayo

newestUser wrote: »

While I agree that comparing the average salary/value ratio would lead one to conclude that houses are overpriced, I'd argue that salaries are higher than average in south Dublin, and I also think that historical salary/price ratios are somewhat redundant today because Ireland is much wealthier. Lots of people have parents who are willing to give them 10000's of euro towards their house.

OMG so unlike the rest of the world we should have different rules when determining house prices.
Why is a 3 bed house in South County Dublin worth so much more than rest of the country, when salaries in Dublin are not weighted as for instance in London ?

We will see how wealthy Ireland and Irish people really are in a couple of years.
Basing ones wealth on property as we can now see is not a great idea.
Example: On paper two years ago your Irish house may have been worth €1.5 million, your overseas apartment in Bulgaria worth €150,000 and your BMW 5 series worth €80,000 but what are they worth if you try and offload them right now and how much do you owe the bank ?

Factoring in what mammy and daddy are able to give you should not be factored into calculating how much property should be worth and how much of a mortgage you should get :rolleyes:

It is that kind of sh*** that us where we are today :mad:

TheCityManager

jmayo wrote: »

OMG so unlike the rest of the world we should have different rules when determining house prices.
Why is a 3 bed house in South County Dublin worth so much more than rest of the country, when salaries in Dublin are not weighted as for instance in London ?

We will see how wealthy Ireland and Irish people really are in a couple of years.
Basing ones wealth on property as we can now see is not a great idea.
Example: On paper two years ago your Irish house may have been worth €1.5 million, your overseas apartment in Bulgaria worth €150,000 and your BMW 5 series worth €80,000 but what are they worth if you try and offload them right now and how much do you owe the bank ?

Factoring in what mammy and daddy are able to give you should not be factored into calculating how much property should be worth and how much of a mortgage you should get :rolleyes:

It is that kind of sh*** that us where we are today :mad:

I should point out that we are both in very ordinary jobs..no bmws or jeeps here...no overseas apartments either...20k savings would be nice

Think I need to convince herself that we should wait ....

Thank you all for the time taken to respond......just hope now I can escape from this :rolleyes:

gurramok

newestUser wrote: »

Lots of people have parents who are willing to give them 10000's of euro towards their house.

Not now, the parents pensions have probably been wiped out and they need the dosh

dbyrne

if its the house you want buy it, if your not sure then dont. have a valuation done on the house with current prices in mind and if the house is not worth the amount you offered withdraw your offer and offer less.

Hanley

I'll just make one point....

Assuming you can afford the house now, think you're getting a good deal, and don't mind the idea of possibly being able to buy it 12-18 months down the road for less, you should consider it.

Negative equity only really matters if you're trying to re-sell the house. If you're staying there for the foreseeable future (15 years say), I wouldn't be too concerned.

The being said, if I was in the position to be able to buy now, I wouldn't.

I think it's only a matter of time before more builders break ranks and start to offer their unsold units at steeply discounted prices. Once one or two of the big ones do it, the rest will follow. And assuming the banks start to put more pressure on them to realise some of their unsold properties, the result will probably be amplified.

Suffice to say, I'm saving hard and watching things closely at the moment!

jmayo

TheCityManager wrote: »

I should point out that we are both in very ordinary jobs..no bmws or jeeps here...no overseas apartments either...20k savings would be nice

Think I need to convince herself that we should wait ....

Thank you all for the time taken to respond......just hope now I can escape from this :rolleyes:

Sorry OP, those comments were aimed at newestuser and his latter day Irish person's view that our property market is so different to the rest of the world and the rest of history, and that we are ever so wealthy a nation even though it is mostly a sham based on huge loans.

As some of us have said if you feel that this is the house you will be in long term and you can afford it with no huge mortgages involved then you can go for it, but as some have pointed out you will have to find rented accomodation in the near future anyway if there is huge amount of work to be done on the property.

A couple of things to remember or rather forget.
Disregard how much the house has been worth over the last 7 years and factor in at least a good sizable percentage off the advertised price for any property on the market in the area.

Senna

TheCityManager wrote: »

Did I mention that I can buy the house with no mortgage?

Will need to borow for renovations though :rolleyes:

This is one of the most important bits of information, you can buy the house without a mortgage but will have to borrow the 60k for renovations. There is a good chance (i'd say 100%, but that only an opinion) that in 1/2 years time you could get this house, or an ideal one like it, for the amount you have saved. Thus giving you that chance to be mortgage free in an ideal house.
I think you should pull out of this deal and watch the market for when your X amount of saving will buy the ideal house with no loan needed. When you find that house, it will be the perfect time to buy.
If you keep in the mind set of "what if the same house is on the market for X less than i paid" then you could well be in the same situation next year, or the year after or the year after etc.

If I had the ideal house and mortgage free i dont think i'd really care what the housing market is doing. Your so close to that right now, i think it would be worth the wait and probably not a long wait.

TheCityManager

Senna wrote: »

This is one of the most important bits of information, you can buy the house without a mortgage but will have to borrow the 60k for renovations. There is a good chance (i'd say 100%, but that only an opinion) that in 1/2 years time you could get this house, or an ideal one like it, for the amount you have saved. Thus giving you that chance to be mortgage free in an ideal house.
I think you should pull out of this deal and watch the market for when your X amount of saving will buy the ideal house with no loan needed. When you find that house, it will be the perfect time to buy.
If you keep in the mind set of "what if the same house is on the market for X less than i paid" then you could well be in the same situation next year, or the year after or the year after etc.

If I had the ideal house and mortgage free i dont think i'd really care what the housing market is doing. Your so close to that right now, i think it would be worth the wait and probably not a long wait.

That makes complete sense !!

That is my plan if I can extract myself without damaging my relationship...and sure if it does go ahead, it's not the end of the world as we wouldnt ever be moving out....mortgage free would be good though

Cheers all

ZYX

TheCityManager, one of the problems with the answers you are getting is the question you asked. If you had said; "a house on my street is for sale at €400,000. I am thinking of buying the house I rent. How much should I offer the landlord? "
The vast majority would have advised you to offer more than €240,000. If the €400,000 for your neighbours house is a realistic price then you are getting a very good deal. Not many people think house prices are going to fall more than 40% from current values.

Perhaps the first thing you should do is consult a builder or architect and see can you do the renovations needed, is it possible to convert the attic (and still call it a room) and how much will it all cost. You will then be in a much better position to decide if this house is for you or not.

newestUser

jmayo wrote: »

OMG so unlike the rest of the world we should have different rules when determining house prices.
Why is a 3 bed house in South County Dublin worth so much more than rest of the country, when salaries in Dublin are not weighted as for instance in London ?

We will see how wealthy Ireland and Irish people really are in a couple of years.
Basing ones wealth on property as we can now see is not a great idea.
Example: On paper two years ago your Irish house may have been worth €1.5 million, your overseas apartment in Bulgaria worth €150,000 and your BMW 5 series worth €80,000 but what are they worth if you try and offload them right now and how much do you owe the bank ?

Factoring in what mammy and daddy are able to give you should not be factored into calculating how much property should be worth and how much of a mortgage you should get :rolleyes:

It is that kind of sh*** that us where we are today :mad:

Woah woah woah jmayo, relax the cacks.

You're jumping to conclusions.

You assume that I when I say wealth, I mean property. Not necessarily. People have money tied up in other assets (cash, bonds, etc.)

Even if someone's parents did have property, it's quite possible that it was bought years ago at something approaching sensible prices, so a fall of 50% in the value of the property means their investment has doubled, not tripled, in 10 years.

Despite the obvious faults with the Irish economy, and the property bubble, there still is real wealth in the Irish economy. Lots of people still have parents in a position to give money to their kids, or have won a poker tournament in vegas, or have a website that makes them an extra 50k a year on the side, made great money in London/New York for a few years, or whatever. Not all this money has vanished into the ether, it's not all tied up in BMWs, Bulgarian apartments, and whatnot.

South Dublin is an area lots of people want to live in. And many of those people have access to money that isn't their salary. It might be gifts from parents, it might be some other form of windfall. Wealth tends to concentrate in ghettos, and South Dublin is the best example of such a ghetto in Ireland.

I'm not saying it's fair that some people are gifted money, or have some manner of windfall, and can afford to buy property at relatively inflated prices, but it's reality. I stand by what I said: a case could be argued that the country is wealthier now than 30/40 years ago when mortgage multiples were strictly limited to 3.5 times income, and that people are able to tap into different sources of cash, other than what comes in through their salary. You might not be able to, I don't know. I certainly can't. But I suspect lots of people can. There's a girl sitting across the desk from me now, whose parents will give her a significant lump sum towards a house, and have already done for her brother. I know lots of people for whom this was the case. The parents have their mortgage paid off, the kids are grown up, they have a bit of cash lying around and are willing to give it to the grown up kids now, in order to help them buy a home, as opposed to waiting until they pop their clogs. This is a lucky situation to be in, and I'm not arguing that it's the norm, but it's far from a rare set of circumstances, I've seen lots of people being helped out by parents in this manner, and I'd say that it's much more common now than 30/40 years ago, where no-one had a pot to piss in, and the older generation hadn't accrued any assets, other than their primary residence, and weren't in a position to pass on money to their kids.

I think that this is a reason that it could be argued that 3.5 times income as a guide for valuing property is somewhat redundant. I'm not saying it justifies house prices of 10 times average income, but I do think in the case of prestige areas, or mid-range houses, that these properties will not fall to 3.5 times average income.

There was a lot of bull and spin about the property market on the way up, and I think it's happening on the way down as well. With regards to your response to my post, you're making big presumptions going on the very little that I've said.

Sorry OP, those comments were aimed at newestuser and his latter day Irish person's view that our property market is so different to the rest of the world and the rest of history, and that we are ever so wealthy a nation even though it is mostly a sham based on huge loans.

That's a bit harsh, you're getting this from:

NewestUser wrote:

While I agree that comparing the average salary/value ratio would lead one to conclude that houses are overpriced, I'd argue that salaries are higher than average in south Dublin, and I also think that historical salary/price ratios are somewhat redundant today because Ireland is much wealthier. Lots of people have parents who are willing to give them 10000's of euro towards their house.

I never said anything about Ireland being 'different' or special. However, I argue that the world today, the amount of wealth in it, and how it is distributed, is different from 30/40 years ago, and that house prices, particularly in prestige areas such as South Dublin, are buoyed by wealth, not just income. Take note: when I say 'wealth', I mean accrued assets. Wealth could be 30,000 euro someone
who has been working for 5 years has invested in bonds or a deposit account: it's not necessarily JD Rockefeller style wealth.

I still believe that Irish property is ridiculously overpriced. I think the Irish economy is in serious trouble. I don't think that we Irish have rewritten the economic rulebook. I'm a bear on Irish property and the Irish economy in general. I consider Irish people's views over the last 5-10 years that property is a one-way bet, and that you can make money by just buying a pile of bricks and letting it sit there to be naive, and damaging to the economy in the medium-long term. However, arguing that prices *have* to come down to 3.5 times average local salary, everywhere, is IMO just as blinkered and naive as arguments like 'rent is dead money', 'property only ever goes up', or 'safe as houses'.

jmayo

newestUser wrote: »

Woah woah woah jmayo, relax the cacks.

You're jumping to conclusions.

You assume that I when I say wealth, I mean property. Not necessarily. People have money tied up in other assets (cash, bonds, etc.)

Sorry I did jump to conclusion and while I agreed with a lot of your argument, I feel that we cannot dump the 3/4 times average salary concept out the window just because someones parents have money.
Why should we be different to say UK ?
The idea should be that someone can afford property without having to rely on their parents.
From your original post you seem to factor into affordability the ability of parents to give loands or gifts, that is what helped us create a climate where have huge 100% mortgages etc.

Very true there are those that had the cop not to put all their eggs in the local property market. Some people will always have money and investments.

newestUser wrote: »

Even if someone's parents did have property, it's quite possible that it was bought years ago at something approaching sensible prices, so a fall of 50% in the value of the property means their investment has doubled, not tripled, in 10 years.

Yes very true, there are those that bought way back in the 70s/80s or even before and their properties went up but you also need to factor infaltion over those years.
I do know some of those people released equity and ran off an bought fancy cars, oversea property and then bought property for the kids.

newestUser wrote: »

Despite the obvious faults with the Irish economy, and the property bubble, there still is real wealth in the Irish economy. Lots of people still have parents in a position to give money to their kids, or have won a poker tournament in vegas, or have a website that makes them an extra 50k a year on the side, made great money in London/New York for a few years, or whatever. Not all this money has vanished into the ether, it's not all tied up in BMWs, Bulgarian apartments, and whatnot.

Yes there will always be rich and poor people.

newestUser wrote: »

South Dublin is an area lots of people want to live in. And many of those people have access to money that isn't their salary. It might be gifts from parents, it might be some other form of windfall. Wealth tends to concentrate in ghettos, and South Dublin is the best example of such a ghetto in Ireland.

You do know that there are areas in South Dublin that are not wealthy, that have huge social problems e.g drugs, unemployment where house prices are very inflated because next road over the address is better.

newestUser wrote: »

I think that this is a reason that it could be argued that 3.5 times income as a guide for valuing property is somewhat redundant. I'm not saying it justifies house prices of 10 times average income, but I do think in the case of prestige areas, or mid-range houses, that these properties will not fall to 3.5 times average income...

Sorry I was abrupt with your earlier post but this is where I have the big difference of opinion.
I don't think we can set the value of an average house based on the fact that some people have wealthier parents.
I believe prices of all property is way too high, but that doesn't mean that all houses have to come down to 3.5 or 4 times 35,000.

newestUser wrote: »

I still believe that Irish property is ridiculously overpriced. I think the Irish economy is in serious trouble. I don't think that we Irish have rewritten the economic rulebook. I'm a bear on Irish property and the Irish economy in general. I consider Irish people's views over the last 5-10 years that property is a one-way bet, and that you can make money by just buying a pile of bricks and letting it sit there to be naive, and damaging to the economy in the medium-long term. However, arguing that prices *have* to come down to 3.5 times average local salary, everywhere, is IMO just as blinkered and naive as arguments like 'rent is dead money', 'property only ever goes up', or 'safe as houses'.

I agree prices will not come down to 3.5 everywhere but we are talking average here. There will always be properties worth millions, just like there will be properties worth shag all.
It's all about location location.

Freddie59

EKRIUQ wrote: »

The property market is really on a downward spiral but there is grades of seller's,
(1) People who are in no panic of selling and still looking for crazy prices but don't really care because they've nothing planned and are still testing the market,
(2) The people who are very eager to sell but have to get a figure to pay what ever they had planned with their money (I'm guessing the OP landlord is in this situation) and then you have
(3)The desperate! The developers, the people who over stretched them self’s and then lost their jobs.

And at the moment theirs no hope in the market because theirs very little buyers in the market and the desperate are slashing prices as much as they can but no bank will let them sell in negative equity unless their sure they’ll get their money back through other ways. Thinking houses that were €350,000 selling for €120,00-€150,000 is wishful thinking but I don’t think that will happen not because people would just get re-possessed, bad credit and prefer live with that than having to repay bank a debt of €100,000 for the next 30 years.

At the moment advertised prices mean nothing because it’s a more take it of leave it market.

Almost like EA speak there.;):rolleyes::D

DON'T BUY!!!

Check these sites first:

www.thepropertypin.com

www.treesdontgrowtothesky.com

www.irishpropertywatch.com

www.irishhometruths.com

Just un-agree to buy it.:)

gurramok

newestUser wrote: »

I think that this is a reason that it could be argued that 3.5 times income as a guide for valuing property is somewhat redundant. I'm not saying it justifies house prices of 10 times average income, but I do think in the case of prestige areas, or mid-range houses, that these properties will not fall to 3.5 times average income.

However, arguing that prices *have* to come down to 3.5 times average local salary, everywhere, is IMO just as blinkered and naive as arguments like 'rent is dead money', 'property only ever goes up', or 'safe as houses'.

Alot will.
http://www.independent.ie/business/personal-finance/property-mortgages/stringent-homeloan-rules-examined-1677893.html

UK style restrictions maybe coming!

Duckjob

gurramok wrote: »

Alot will.
http://www.independent.ie/business/personal-finance/property-mortgages/stringent-homeloan-rules-examined-1677893.html

UK style restrictions maybe coming!

I'd say Country Tom and his buddies might have something to say about that...

Country Tom wrote:

Look what they're proposing to do to poor FTBs!

ZYX

gurramok wrote: »

Alot will.
http://www.independent.ie/business/personal-finance/property-mortgages/stringent-homeloan-rules-examined-1677893.html

UK style restrictions maybe coming!

Of course remember it is 3.5 times total household income. So a couple, both working buying first house could expect a mortgage of about €250,000. Older couples on higher incomes or with equity from a previous house or with large savings would get larger mortgages

Senna

gurramok wrote: »

Alot will.
http://www.independent.ie/business/personal-finance/property-mortgages/stringent-homeloan-rules-examined-1677893.html

UK style restrictions maybe coming!

I would say this is close enough to the lending levels banks are working to at the moment, even a bit less. If they had of said 3.5 main earner and 1 times second, then that would have been a better criteria. There is a lot of talk on here and other sites about banks not lending, but most (a couple have completely stopped) are lending if you meet these requirements.

ZYX wrote: »

Of course remember it is 3.5 times total household income. So a couple, both working buying first house could expect a mortgage of about €250,000. Older couples on higher incomes or with equity from a previous house or with large savings would get larger mortgages

So how many couples do you think both have enough job security to buy a house? the answer is not many. There are plenty of higher earners and trader-uppers who have more money but the market has still stalled because prices are still far to high. The market will find its level by itself and no amount of regulations or outside influences will chance that. When the average house price is 3.5 (4.5 i always believed) times one average wage (which is falling) then some kind of bottom might be near.
Its ridiculous to think two average wage works should be looking at a mortgage of a quarter of a million euro, and this is a restricted level for mortgages:rolleyes:

~Trixiebelle~

Citymanager!

I think i know how your gf feels... we are similar circumstances as yourselves and it is so frustrating living in a place that ... well basically is a kip!! Its hard as your kids get older (mine are 9 and 7) and you know you only have a couple more years with them under your roof and you want them to have all the things they deserve from their home.. ie..a nice home for them to have birthday parties, entertain and princess like bedrooms. oh and a decent shower!! A place to be proud of..

My dream home is to have a lovely spacious family home, 4 bedrooms, bay window and a utility room. Its not alot to ask considering myself and himself work full-time. Even though prices have dropped, it still would be a financial disaster to buy the house we want. The economy is a total mess and god knows if either of us will still have a job this time next year. so, i know that we have to wait and by the time the house prices drop to a level that are reasonably priced, the dream home will be of no use for just the two of us!!

It kills me!!:( but i will not buy...we have one life and hopefully, if we can retire 10 years earlier or have money left for the college funds coz we're not stuck with a hefty mortgage over us.

Its hard but you have to think long term...

if landlord wants you out, then just rent a nice modern house in your area and tell the new landlord you want to paint the kids room. Hit Ikea and decorate it for them cost you a €1,000 tops. It will give herself a project to do and then hopefully 2 years time will be a "perfect" time to buy....

this is what ive decided!!:)

Senna

~Trixiebelle~ wrote: »

it is so frustrating living in a place that ... well basically is a kip!!

Why are you living in a kip, there have never been so many houses to rent and i dont know of any particular area that has a shortage of houses.
You are right in your think, in 2 years time the market should be a lot more realistic, but 2 years is a long time to live somewhere you dont like.

If you have an area (and even a particular street or estate) that you would like to buy in, could you rent in that area at the moment? Moving rented accommodation can be very annoying and a lot of upheaval for a family but the rental market is in your favour with huge choice and dropping prices.

Freddie59

newestUser wrote: »

However, arguing that prices *have* to come down to 3.5 times average local salary, everywhere, is IMO just as blinkered and naive as arguments like 'rent is dead money', 'property only ever goes up', or 'safe as houses'.

How so? The market will dictate this, and current trends are indicating that it will be inevitable. For example, if the people are only allowed borrow 3.5 x salary, and house prices are running at, say, 6 x annual salary, you don't need to be a rocket scientist to figure what's going to happen there.

The price of the house DOES indeed HAVE to fall. It will not sell otherwise. Simple economics.:)