Should I continue to rent or buy a house?

Da GOAT

Hi, Ive been on these boards the past few weeks and only started to really understand details of the property market so Ive a simple question of should I continue to rent or buy.

Right now me and my fiancee are renting for 1075e pm. Lease up in May. We have no debts and have enough of the housing deposit which we saved to actually get a house. We are imo in a great position as first time buyers.

The type of houses we are looking to buy are circa 1000-1100e to just rent pm.

Given the fact it appears the estate agents value of houses is still way over estimated (houses listed as 300k are just worth 250k), sellers are being stubborn too, interest rates are rising so cant trust the mortgage repayment figures (what appears resonable at 1,000e repayments are likely to be circa 1300e given interest hikes PLUS a chance of being even higher).

This does worry me some that entering a mortgage now is a bad move. Our plan a few months ago was to buy a house now then get married next year. Putting off buying till next year puts some pressure on us but maybe renting in the area where we were gonna buy, for a few more years, would be best.

Would love to hear what others would think of buying or renting?

nice1franko

In a similar situation to yourself so don't have advice as such but I'll share a couple of my thoughts:

1) The fact that prices dropped 20% last year would lead me to believe that they aren't going to suddenly stop this year.

2) I've read a few places now that the 'true value' of a house/apt is 14 years of rent which still makes any place we've been looking at over valued to the tune of 100k (300- 330k houses, asking price)

3) See this also: http://www.irishhometruths.com/node/284

AARRRGH

Ireland is financially screwed and will be for maybe 10 - 15 years.

House prices are going to continue dropping.

So the longer you wait the more money you'll save over the life of the mortgage.

And this could be a large amount of money: 100k - 200k.

It's worth waiting.

stepbar

Da GOAT wrote: »

Hi, Ive been on these boards the past few weeks and only started to really understand details of the property market so Ive a simple question of should I continue to rent or buy.

Right now me and my fiancee are renting for 1075e pm. Lease up in May. We have no debts and have enough of the housing deposit which we saved to actually get a house. We are imo in a great position as first time buyers.

The type of houses we are looking to buy are circa 1000-1100e to just rent pm.

Given the fact it appears the estate agents value of houses is still way over estimated (houses listed as 300k are just worth 250k), sellers are being stubborn too, interest rates are rising so cant trust the mortgage repayment figures (what appears resonable at 1,000e repayments are likely to be circa 1300e given interest hikes PLUS a chance of being even higher).

This does worry me some that entering a mortgage now is a bad move. Our plan a few months ago was to buy a house now then get married next year. Putting off buying till next year puts some pressure on us but maybe renting in the area where we were gonna buy, for a few more years, would be best.

Would love to hear what others would think of buying or renting?

The formula I use is as follows:-

Rent Per Month X 12 Less 10% Expenses (I.E Mgt Fees) / 6% x 100

As an investor I'd be looking for a min 6% yield (mind you if Interest rates increase any time soon this could go higher but that's the risk you take).

Based on the rent you quoted 1100 x 12 less 10% expenses / 6% X 100 = 198k. So that's the economic value of the house your looking at. Depending on it's location you move up or down based on that. Clearly a lot of houses for sale have not reached this pricing level.

skelliser

I am not in a position to buy but if i was i would hold off another year.
House prices are still dropping and there is no end in sight to the drop.
I would review the situation in sept/oct.