Why buy a house when it won't be worth 2009 prices again until 2020

rinty

Diarmuid wrote: »

Sure. places like this in Roscommon

that house is 55.000

rinty

smccarrick wrote: »

Poland are spending 15 billion in EU structural funds between now and 2013- not just on infrastructural projects- but also football stadiums (they are sharing the tournament with the Ukraine). Poland is splashing out EU dosh in the way we used (and its Irish dosh too- as we are a net contributor to the EU budget).

Poland is in a strange place- its so totally out of kilter with whats happening elsewhere- they are screaming to their expats to come home and help out- they don't have sufficient numbers of construction and professionals to make use of the resources at their disposal.

Poland's wages are shooting up- as ample money is chasing scarce labour. It is very doubtful that it will ever reach Irish levels- which are being sustained at artificially high levels by an inappropriate social welfare regime (its also whats sustaining rental levels- as the HSE payments have established a defacto floor on how low rent can/will fall).

Ireland is totally the other end of the spectrum- we're currently borrowing 58-60m a day to cover social welfare expenditure and other current expenditure. We are not being bailed out by the EU- we are being allowed increase our national debt back to Italian levels- most projections show us on 200% debt to GDP ratio by 2020 (if we implement the 4 billion a year cuts proposed by the EU- and significantly higher if we don't).

We are not going to be bailed out- and the private sector is hocked to its gills even worse than the public sector on this occasion- thats the big difference with where we were at in the 1980s- at least then the private sector was largely debt free.

Where are we going? I can see significant immigration picking up- Australia is already doing up recruitment campaigns for Irish professionals willing to make a new life down under- if I hadn't ties, I'd be very interested......

whats your point?..im talking about income mortgage ratio??? 5000 annual wage in Poland if your lucky..wages shooting up what??

SLUSK

I don't understand why anyone would by a house in Ireland, every house and apartment I have seen in this country is of very poor standard. The standard of living in Ireland and UK is a joke. :mad:

johndaman66

Some interesting viewpoints and perspectives being put forward in the thread. I don't think its as simple as saying why buy a house when it wont be worth 2009 prices again until 2020. In any event who knows what property prices will be in 2020, who has the magic crystal ball?

Everybodys situation is different and in any market you will have a certain level of activity at every price level. I do believe there is very little activity at the moment but as I say there will be some. No doubt a family may buy a house in an estate for 220k where a similar house they were looking at was selling for 340k less than two years ago for example. 340k might have being out of reach while they believe that 220k is much more affordable and they bite at that price. They may/ may not anticipate further price drops but are happy to buy as they can now comfortably afford to at new price/ sick of renting/ want to put down roots etc etc. Fact remains that peoples emotions do play a major part and moreso in Ireland I think, regardless of whether you agree or disagree with this reasoning.

Having said that I do think that the market will remain pretty stagnant generally until FTB's start to buy in anway big numbers. This idea of get in quicky before foreign investors do so before you as previously suggested in the thread is just ludacrious in my opinion. Unless I'm totally and utterly missing something why would a rationale investors be queueing up to buy into a falling market? I myself am a potential FTB but am holding off for the moment as think there are too many uncertainties and risks and everything points to further price drops which would overtake my cost of renting in the meantime. The discussion came up in my department at work the other day. Most people involved in discussion were in my general age bracket as in 25 to 35 and were either renting or living with parents still. None of us had any intention of buying any time soon. The one guy who did buy a couple of years back and is normally very opinionated and vocal kept unusually quiet. My boss who is about 45 and would have bought before the boom argued there is never a bad time to buy property, rent is dead money, etc... Think that attitude which had traditionally being rife in Irish society and perhaps a legacy which remained with us since the plantations is slowly but surley dying out. The younger up coming generation are now becoming of a different mindset as they see the crippling debt their counterparts, or even parents have burdened themselves with and are put of by it.

Also a previous poster suggested that property or anything else is sold at a cost plus a mark-up and should always sell above cost and overheads covered. That is what one would normally expect but the way things are costs in lots of cases are very much irrelevant. Selling prices bore little or no resembelance to costs in the boom years so I do not see why that cannot turn around the other way for existing builds.

Tech3

Interesting post johndaman66. I will eventually be a FTB but not at the moment. I'm only 24 and have well over a deposit but I would like to have a small to no mortgage when I do plan to buy. I have never been in negative equity and don't plan to either!

However I live in a city and prices at the moment are too expensive to buy. I would rather wait 10 years than commuting an hour every day from a place that is cheaper.

bangersandmash

Kipperhell wrote: »

I never mentioned "nice areas". There is more to the market than D4/6. Rents haven't all fallen at the rate you are suggesting.

You made an obscure annecdotal point about rents not falling due to the mantra of "location,location,location". If that doesn't apply to "nice areas" or D4/D6, where does it apply?

In reference to the Dun Laoghaire scheme, the point is that there are sites that are ready to be developed in the short to medium term. The CIF line that we're soon going to suffer from a shortage of property due to the current low number of completions is a red herring. Claiming that we're going to run out of accommodation because people want to move out of their parents' home is an equally spurious argument.

Kipperhell wrote: »

I suggest you actually read what somebody says rather than assume their moderate view is fundamentally wrong because it does not believe in the extreme views of others.

Are you enjoying your glass house? I suggest you take your own advice by reading and responding to the points made. Your unsupported optimism sounds rather extreme to me.

PEPPI

bobbiw wrote: »

would you buy a house today.

If you knew that it would not be worth the same amount as you paid for at least 10 year.

Or that within a year it would be worth 20% less than you paid for it.

So why are people still buying.

If you intend to live in your house rather than an investment, I say buy
now while the Int. rate are low.
No matter what they say, don't get caught in the head lights of a car. History will tell you that house prices have always..... always gone up,even thought things are not so good now, people have to live somewhere.

I say the house prices are good now, but if you want to wait till the spring, thats even better, but I would not leave it to long after that.

AS I SAY PEOPLE WILL ALWAYS NEED A PLACE TO LIVE.

PEPPI

Kipperhell wrote: »

I would probably not expect much housing to be constructed over the medium term. There are going to be areas with mass vacancies but there will be high demand areas too. It just doesn't make sense to build mass housing at the moment.

I rent some properties for family members and not one has dropped more than 15% and have never been vacant for longer than a week in the last 5 years. Location,location, location remains the case.

Your so right it all about location, location, and most important, buying the least expensive (or smaller house) in an upscale neighbour will always turn a great profit.

techdiver

PEPPI wrote: »

No matter what they say, don't get caught in the head lights of a car. History will tell you that house prices have always..... always gone up,even thought things are not so good now, people have to live somewhere.

Interesting...





I suppose Japan is completely different to any other crash in the same way our "boom" was "based on sound fundamentals"???

AARRRGH

PEPPI wrote: »

Your so right it all about location, location, and most important, buying the least expensive (or smaller house) in an upscale neighbour will always turn a great profit.

The least expensive house in an upscale area at today's prices will still be at a semi-bubble price. And the entire celtic tiger was a sham based on swapping large loans with each other. So I would think it might be a long time before any new purchases will make a profit.

quozl

PEPPI wrote: »

I say buy
now while the Int. rate are low.

I think you're mistaken in that approach. If you buy while interest rates are low then buyers will be able to borrow more money relative to when interest rates are high. So properties will cost more.

Conversely if you buy when interest rates are high, house prices will be lower as people can borrow less money. So you'll pay less for the property, and hence save a lot on interest (and principle) payments over the course of the mortgage.

Any counter-argument to this theory?

quozl

quozl wrote: »

I think you're mistaken in that approach. If you buy while interest rates are low then buyers will be able to borrow more money relative to when interest rates are high. So properties will cost more.

Conversely if you buy when interest rates are high, house prices will be lower as people can borrow less money. So you'll pay less for the property, and hence save a lot on interest (and principle) payments over the course of the mortgage.

Any counter-argument to this theory?

You've got it about right, only comment would be to say that if the banks do it right in future;

All loans will be stressed tested against the highest likely interest rates that could be reasonably be expected during the lifetime of the mortgage and limit the loan amount accordingly. Hopefully preventing overlending.

That would have a knock on effect in suppressing house prices when rates are low, but will save the mortgage holders from being screwed when rates rise again.

hmmm

PEPPI wrote: »

If you intend to live in your house rather than an investment, I say buy
now while the Int. rate are low.

What sort of advice is that? Interest rates may stay low for the next year or so, but mortgages typically last an awful lot longer. If you can only afford to buy when interest rates are low, what will you do when they inevitably rise?

astrofool

techdiver wrote: »

Interesting...



I suppose Japan is completely different to any other crash in the same way our "boom" was "based on sound fundamentals"???

Japan has been in deflation for more than a decade, and only now looking like coming out of it. It was also hampered by a lack of reform minded politicians who didn't do anything to act upon it till Koizumi (who resigned once he got his reforms through).

Ireland has worse politicians, but we're not going to be allowed 15 years of deflation as part of the Euro.

astrofool

astrofool wrote: »

Ireland has worse politicians, but we're not going to be allowed 15 years of deflation as part of the Euro.

I'm not so sure, The Irish economy is only about 3% of the Eurozone economy, it will likely to be allowed to continue deflating until costs of goods & services are in the same ballpark of the major Eurozone countries.

If this process takes 20 years - "so what" will be the attitude of the ECB.

The ECB will not allow inflation to rise above about 2% or so.

The_Conductor

Deleted User wrote: »

I'm not so sure, The Irish economy is only about 3% of the Eurozone economy, it will likely to be allowed to continue deflating until costs of goods & services are in the same ballpark of the major Eurozone countries.

If this process takes 20 years - "so what" will be the attitude of the ECB.

The ECB will not allow inflation to rise above about 2% or so.

Very true......
The low interest rate regime of the past decade may have suited France and Germany- but it sure as hell didn't suit Portugal, Ireland, Greece, Spain, Italy and strangely eough- The Netherlands. It very much is the case that we are a minor partner in the Euro experiment, and while people may listen to our represenatative around the table, at the end of the day- policy is decided by the larger economies.......

Japan was in deflation- with effective negative interest rates- we on the other hand are facing massive increases in interest rates (normalisation is considered to be ECB overnight rates of 4.5-4.75%)- and we have to accept that the Irish lending institutions are not charging normal margins to retail customers- when compared to their international peers- this is also expected to change (esp. now that they have to pay the real price of the bank guarantee). Irish Life and Permanent have already fired a shot over the interest rate bows, others are going to follow before long.......

rinty

I think in a neo liberal utopia like Ireland,one should think twice about getting a mortgage. The best way to tackle the situation is to remain borrowing for a couple more years no matter what age you are. Prices will not go up on this Island for the next 10 to 20 yrs and may keep going down for a couple of more years.There is no hurry. Although NAMA will cause monster high taxes for us all,which will make repayment difficult even on a bargan. Does on mortgages over

rinty

200.000 will have their mortgages sliced so they can make REpayment..We will live basically in a nation of social housing were everybody will be PUNISHED FOR THE SINS OF THE NIAVE.

Gurgle

rinty wrote: »

Prices will not go up on this Island for the next 10 to 20 yrs...

Can you check your crystal ball for tonights lotto numbers please?

rinty

No but i predicted that the virgin Mary was not gong to turn up in Knock a 3pm today. I was right. I hope my other prediction is wrong,lets wait and see.

deablo

thank you

Highly Salami

deablo wrote: »

thank you

for what?

Highly Salami

Highly Salami wrote: »

for what?

For being a friend...

The_Conductor

Behave guys!!!

Rory1

jimmycrackcorm wrote: »

Why buy a new car etc.

You need a car and the cost of acquisition works out cheaper than the alternative.