Am I mad to be buying a house?

DeVore

I am looking at buying a 300k house, nice place, 3 beds etc...

I have a bunch of cash from my folks, my savings and no other debts. I'd be borrowing probably 200k.

I live alone and spend 800 a month on rent for a ****ty rathmines single flat (ok it has a front room but its small).

I could rent one of the bedrooms, and take one myself, and have an office in the other. The rent would almost cover the mortage as I see it and my outgoings get slashed while still taking this opportunity to get a place of my own.


But while I cant see anything particularly dangerous (I'd be locking in the interest to a 3-5 year fixed to get over this current lunacy) ... I must admit I feel like I must be mad to consider it at this time...

DeV.

DeVore

PS: Sorry, I dont mean this as a "examine my finances" I mean this as an economics question applicable to anyone thinking of buying a house now...

DeV.

The_Honeybadger

Nobody can tell you with any certainty what way house prices will go, you could be in negative equity this time next year, or your house could go up in value if it is in a sought after area, if you plan on staying there long term it doesn't matter anyway.

Personally I think houses will fall more but who knows, if it's the right house for you and you can afford the repayments and have a solid job then why not

meditraitor

If you can buy and reduce your outgoings in the process then I think its probably a sound move.

I cant see house prices going more than 10 or 15% lower than the current market price so if the economy makes even slow but upward progress over the next 5 years you should be back to even if not positive equity.

If I could I would do what you are considering.

EL_Loco

I think the points made when houses were very expensive still hold now they're falling.

A mortgage is on you (anyone buying a house) and it lies with you to ensure you've the means to finance it, with an cushion of money for incidentals.

If you can afford it, if you like the house, if you're happy to live in it for the next 10 - 15 years (minimum) then the actual price tag becomes less relevent.

If you're asking have we hit bottom yet, I can't say. But again, that's only a concern if you're looking at it as an investment. not sure if that's any help.

IrishTonyO

If you are planning on staying in the house for 5 years plus, then reckon with a fixed interest rate it might be a good time. Prices will fall some more, however interest rates will also rise.

Inquitus

Its hard to know the value of houses at the moment. Most houses are up for sale at a defined minimum rather than their true value. The minimum price perhaps being the amount someone needs to achieve to move to a bigger house, or the amount someone needs to cover their mortgage so they can emmigrate etc.

Look on daft.ie or myhome.ie and you can see houses which are essentially the same on the same estates up for wildly differing prices 200k 300k etc.

The market is stagnant as lenders won't lend to anyone but the best prospects, like yourself, with huge deposits and low risk.

If you are happy paying 300k for the house, and feel its worth it, and house prices are near a bottom, sure go for it, but if you feel as some do that we have another 20% or more to go, hold fire for 6mths or a year and don't see your equity eroded by the great dublin housing pyramid scheme

If I was in your position, from what I have read from economists in the papers, and seen on the news, combined with sticking my finger in the air, I would say hold fire for 6mths maybe a year, as the market is still a ways off the bottom. I don't think until a decent level of lending returns we'll see a bottoming out and a return to growth.

woodseb

ultimately it's your own decision, if you are buying for the long term and it is well within your means and its the place you want it may be the right decision

don't rely on renting a room to make ends meet though - its not that easy to do and i can't see how the rent of a room anywhere in ireland would cover a 200k mortgage either?

fontanalis

You seem like you're smart and ballsy.
Seriously, as long as you don't think of it as your golden egg that will make you rich in the near future or why not move into shared accomodation, you should get a better deal on rent.

ei.sdraob

you managed to save up a good amount and seem to have the head for it

maybe save up a bit more for another year or two? while things continue to slide (unless you spot a good deal) everything is still on downward trajectory (despite what Brian says)

time is on your side, especially if you have a good job


do you have to live in Dublin (like work/family)? 300K gets you quite a bit out the West now

Inquitus

ei.sdraob wrote: »

300K gets you quite a bit out the West now

All of Galway City and as far west as Spiddal most likely.........

Permabear

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SkepticOne

Whilst it does not predict the future, I think this graph of prices in real terms over the last 40 years allows a sense of perspective on what we've been through. I think it is a good guard against the "surely they can't fall any more" sentiment that is sometimes expressed.

bamboozle

if i was looking to buy today i'd be looking at 2 factors

1- value - and there's plenty of it out there
2 - job security, unfortunately i'm not guarenteed a job for life.

jmayo

Head over to Accomodation and Property forum with this question and you will get the stock answer.
That is prices are dropping with better value coming everyday, but if you can afford it, have great job security, can get a reasonable old fashioned mortage, don't mind feeling for next few years that you wasted money, desperately need a fixed abode for family reasons, don't intend on selling for years and years then fire ahead.

Personally I think you are madder than a brush, but that's my opinion.

deadhead13

While a Goodbody Stockbokers report issued last week suggested that the Greater Dublin Area would see a recovery in house prices first, it also predicted there will be a further 10% drop, from 40% to 50%. I personally would wait.

DeVore

See I wouldnt be selling this house any time soon. This isnt a quick investment.


I would live in the house for a few years at least but I dont have a wife or kids or a car or any other debts. I could simply rent the house if I wanted to move away.

DeV.

zootroid

I haven't seen any figures to suggest the fall in house prices is beginning to level off. And for that reason I would continue to save, and try build up an even bigger deposit so you have to borrow less when you do decide to buy.

ei.sdraob

donegalfella wrote: »

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@df

I recently bought and large site with uncomplete 4 bed on it in East Galway, took forever for negotiations and sale go thru (like 6 months)

at discount that would make the NAMA chief's eyes water
similar houses in places like Galway, Mayo and Wicklow are still asking north of 450K for...

Im currently on my way to completing it for under 200-210K in total (with no debt involved), could probably finnish for less but I really dont want to cheap out on good insulation,windows and anything that will save money in longterm, while cost of goods hasnt fallen much the cost of labour has fallen alot, its interesting seeing builders compete with each others tooth for nail

anyways theres no debt, and i be using large chunk of it as home office, so kill 2 birds with one stone

but if i was in the position of the OP (third saved) i would have held back and saved more i think (im allergic to debt :P)

DeVore wrote: »

See I wouldnt be selling this house any time soon. This isnt a quick investment..

You have sense houses are for living in not flipping

Sleepy

I feel house prices have further to fall for three main reasons:

1. Interest rates will rise putting more mortgage holders at risk of default.
2. The first group of defaulters the IBF afforded a 6 month moratorium on legal action to will be reaching the end of this moratorium from May.
3. The level of denial of Ireland's current economic situation which is evident from most of the public sector and the amount of home owners who just can't face that they paid 2/3 times more for their property than they should have.

That said, the golden rule of property still applies: Location, Location, Location. Properties in some of the more desirable areas of Dublin seem to be shifting reasonably quickly in the current market. I've spotted a few places in Clontarf that have sold within a month or two of being on the market.

If you're going to take the plunge, be very, very cheeky with your offers. If you're not embarrassed by the percentage of the asking price you're offering, it's too high.

As woodseb says, don't rely on managing to rent a room. Treat any rent you can get as a nice bonus. It's a renter's market at the moment and rents should continue to fall if the department of welfare realise they're over-paying for rent allowance and lower the limits.

€800 a month for a single bed? I've just moved into a semi-furnished, newly renovated 3 bed house in Clontarf and am only paying €200 a month more than that. You could try talking to your landlord about a reduction but tbh, it sounds like you've out-grown the place.

IF I can afford it by then, I'm hoping to start looking at properties early next year with a view to buying around Summer 2011. I'm not arrogant enough to suggest that this is when the market will bottom but my gut tells me it won't be too far from the bottom either way.

EL_Loco

well factor in the decline, and offer based on the estimate of 10%, so in that case 280k looks good to them. They can sell now and get the money in their back pocket, or all parties can wait it out.

They might be eager for a sale. you get your house quicker, they get their money quicker and you haven't had to put in the gap of 6 months.

That said I'm sure every seller out there is being low balled at the moment, But you seem to have the money to back it up and would be ready to pull the trigger if the seller agreed. Get your loan approval from the bank anyway so you know where you stand. Shows the sellers you're serious about buying a house and not just kicking the tires.

changes

DeVore,

What sort of price were they asking for houses like the one you have your eye on during the boom.

Is the asking price 300K? do you think you could get away with 250K.... less your 100k leaving a 150k Mortgage would be nice and manageable.

Amhran Nua

DeVore wrote: »

I live alone and spend 800 a month on rent for a ****ty rathmines single flat (ok it has a front room but its small).

Interest payments are the equivalent to the rent you pay, both are the profit margin for some third party. If the interest payments are excessively more than rent, its a bad idea to buy. Most commentators put normal prices at around 14-18 times annual rent for the area, if its not at that level you might want to wait a while, although with the Publican Party bending over backwards to reinflate the bubble it could go either way in the mid term.

DeVore wrote: »

I could rent one of the bedrooms, and take one myself, and have an office in the other. The rent would almost cover the mortage as I see it and my outgoings get slashed while still taking this opportunity to get a place of my own.

I'll say the same to you as I said to another poster recently - prices will be falling for a few years more yet, and your savings will be simultaneously increasing, two factors which converge on having a larger deposit for a cheaper house, which reduces your interest repayments. I'm considering buying myself these days, but I'll leave it until 2013 or so before making any serious steps, for various reasons too lengthy for this discussion.

If you can save €20k more and the price drops by €20k, you've just saved yourself €40 to €80k in interest, which is no small amount of money over the years. Also keep in mind that FTB tax advantages can evaporate if you rent out rooms, and you might end up having to repay the difference - revenue is ruthless these days.

Sleepy wrote: »

I feel house prices have further to fall for three main reasons:

1. Interest rates will rise putting more mortgage holders at risk of default.
2. The first group of defaulters the IBF afforded a 6 month moratorium on legal action to will be reaching the end of this moratorium from May.
3. The level of denial of Ireland's current economic situation which is evident from most of the public sector and the amount of home owners who just can't face that they paid 2/3 times more for their property than they should have.

*cough* five years overhang and we're still building houses *cough*.

Permabear

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Valmont

donegalfella wrote: »

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Very nice; would these be the gold bars Ragnar Danneskjold gave you when you left the states?

Permabear

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Liam Byrne

Buying a house, maybe....

Buying a home, no.

MaceFace

Anyone thinking of buying property now needs their head examined. Makes absolutely no financial sense.

Taking the most recent data and look at your example:

Daft.ie reported asking prices dropped by 3.4% nationally in the first quarter of this year. The average price is €235k. That equates to an average monthly drop of about €2700.

So, assuming you had bought this house in Jan for 300k with a 200k mortgage, and further assume the sale price falls (data we don't have) were the same as asking price falls, you will be glad to know that your property will probably be worth less than €290k today, but your mortgage will only have gone down by €1350 (assuming 3% interest rate, 200k over 25 years). So, you have lost €9000 in the last three months.

Meanwhile, you could have rented a similar house to the one you were going to buy for say 1k a month, which means you are down 3k over the last three months.

You have saved yourself €6000 by not buying in Jan.

(btw: not implying rent is dead money as you get something for it - a roof over your head).
(bbtw: all the probablys because we don't know where in Dublin they are looking and what the actual price drops are for the area)

Colonel Sanders

DeVore wrote: »

I could simply rent the house if I wanted to move away.

There's not exactly a shortage of rentals out there so be very conservative in any assumption on what this house will rent for

My personal opinion is that property has bit to fall yet (just one person's opinion) on the basis:

• excess supply
• unemployment still rising, also increasing emigration reducing demand
• net wages will continue to fall as there are more pay cuts/increased taxes
• further interest hikes on the way even if the ECB doesn't move
• restricted lending for some time

Have a read here for some advice either

Atlantic Dawn

DeVore wrote: »

I would live in the house for a few years at least but I dont have a wife or kids or a car or any other debts. I could simply rent the house if I wanted to move away.

DeV.

I would examine the rental market at the moment, it has collapsed and rents are still declining.

Back to your original question, if I knew (who can know) that my job was secure or fairly secure for the next 10 years I would be in a position to purchase, however this country is heading for financial armageddon and unless you are lucky enough to have job security in the public service until the IMF come I would advise not purchasing a house as it will restrict your movement when you have to move abroad to find suitable employment.

Wudyaquit

I think it's a matter of risk versus return. There;s a certain risk that house prices could fall further - Colonel Sanders / Sleepy's posts above - but no real chance of return to offset it.
Personally, I think it's very foolhardy to commit to something when the odds are stacked so strongly against you to make a profit.

Theboinkmaster

DeVore wrote: »

I am looking at buying a 300k house, nice place, 3 beds etc...

I have a bunch of cash from my folks, my savings and no other debts. I'd be borrowing probably 200k.

I live alone and spend 800 a month on rent for a ****ty rathmines single flat (ok it has a front room but its small).

I could rent one of the bedrooms, and take one myself, and have an office in the other. The rent would almost cover the mortage as I see it and my outgoings get slashed while still taking this opportunity to get a place of my own.


But while I cant see anything particularly dangerous (I'd be locking in the interest to a 3-5 year fixed to get over this current lunacy) ... I must admit I feel like I must be mad to consider it at this time...

DeV.

Devore I personally think you'd be mad to buy now - prices are only going one way at the moment and will do so for the forseable future.

There's some good advice on here and loads over on the accomodation forum.

How would you feel if that house you'd buy now for €300k was selling for €200k in 2 years? Could well happen....

Keep saving and saving. My own personal opinion (and ive been ready to buy since 2005 and have been carefully reading everything on the accomodation forum and thepropertypin) is that prices will start to level off in 3 to 5 years time. I don't think we're anywhere near the bottom yet.

Remember the old 14 x annual rent for rough valuation, and also look at normal salary multiples.

Also comparing prices now to boom prices as some have done on this thread is silly - what 'values' were back in 2005 is COMPLETELY irrelevant - it was a bubble ffs

Best of luck

nesf

What it comes down to is not so much price but if the right house came up for sale. Prices will continue to fall but if a house came up right now that was perfect and you could comfortably afford the mortgage I'd say go for it.

But if you're just looking to buy ye olde standard 3 bed semi, then I'd hold on another 6 months at least.

Sleepy

Amhran Nua wrote: »

*cough* five years overhang and we're still building houses *cough*.

Most of the overhang is in the middle of nowhere and of low quality and NAMA are already talking about demolishing uncompleted developments so I'm not sure how much of an influence this will be on the second hand market.

The second hand market has been pretty much exclusively what I've been concentrating on as I'm firmly of the belief that most of the residential property constructed over the past 10 years will be falling to bits by 2020 whereas a refurbished house from the 70's/80's will still be standing firm.

dan_d

Prices will fall further but interest rates will rise.
If you can afford the repayments, and you're buying to live in for a long period of time then go for it. The price of a house only matters on the day you buy and the day you sell. Once you buy, and you don't intend to sell, then it doesn't matter.
If you feel buying is right for you now, then do it, and hang what anyone else thinks. It's your life, they're your choices.

bullpost

Wonder if you'd be better at least waiting to the end of the selling season which traditionally starts about now?
Unless you specifically want the house you're interested in I'd be inclined to hold off until at least September.

MaceFace

dan_d wrote: »

Prices will fall further but interest rates will rise.
If you can afford the repayments, and you're buying to live in for a long period of time then go for it. The price of a house only matters on the day you buy and the day you sell. Once you buy, and you don't intend to sell, then it doesn't matter.
If you feel buying is right for you now, then do it, and hang what anyone else thinks. It's your life, they're your choices.

Its very easy thinking it doesn't matter, but if you get new neighbours in two years time, knowing they spent 30% less on their house than you did, it won't be good for your morale.
Also, knowing that if you had of held on for those two years, the extra 200 quid a month you would have been given the bank will go very nicely to enjoying your life a little bit more.

gurramok

DeVore wrote:

I live alone and spend 800 a month on rent for a ****ty rathmines single flat (ok it has a front room but its small).

I could rent one of the bedrooms, and take one myself, and have an office in the other. The rent would almost cover the mortage as I see it and my outgoings get slashed while still taking this opportunity to get a place of my own.

Agree with the sentiment on thread.

I'm in D4 land. 900-1000 is the going price for an nice 1bed place here for example. Even 2beds can be obtained at this price. Maybe you should shop around to get better value on a rental?

The rent-a-room thing happened alot in the bubble years to help affordability. Thing is it will not be really a place of your own as your privacy will be compromised for the next few years to help you pay the mortgage?

Can you deal with that until you can cover the mortgage on your own? It would drive me nuts.

Tazz T

Buying should always depend on your motivation, I believe. I bought at the height on the boom, even though I believed prices would fall because a. children b. I could afford it c. record low interest rates. However, I had a huge deposit, so the capital borrowed was low compared the price of the house.

If you motivation for buying now is for long term affordability then it's probably a good idea. Interest rates are definitely going to rise, so if you fix in for 3-5 years at a good rate now, you might be glad you did. Wait a couple of years and you may find that altho house prices didn't fall much further, interest rates are much higher, so that house puts more of a strain on your monthly finances. Have you been agreed for a loan? Banks are more careful about giving out mortgages at the moment. If you can get one now, you might consider going for it as tomorrow it might be even more difficult.

I'd bear in mind what other people are saying about rent though. It will be hard to rent a room and you could probably get a nicer place at the same price or even lower at the moment.

If it was long term, not for profit and I was able to get a good mortgage deal fixed long term and it left be better off each month, I'd go for it.

Sleepy

From your posts on your past earnings and losings of paper wealth, I know you're not one to be worried by the value of a home if you were to over-pay for a home you'd be living in for 20/25 years at roughly the same amount as you'd have paid in rent elsehwere over that time.

So, look at it another way:

Assume you'll be in the house for 5 years.

Calculate the interest cost of the mortgage and the worst case scenario that you can envisage: say the 300k property being only worth 200k when you want to sell.

So back of an envelope calculations:

3.3% fixed interest on a 200k mortgage over 25 years (monthly payment of €1,054.56):
(taken from BOI 5 year fixed rate first time buyer mortage)

Legal Fees and Valuation Fee: €3,780 (based on BOI site estimate)
Total Mortgage payments: €63273.60 (55773.60 after Mortgage Interest Relief)
Home Insurance: 1949.10 (389.82 per annum based on quote for 3 bed semi in Clontarf from 123.ie)

Total Estimatable Costs: 61502.7

Assumed capital depreciation on the house: €100k
Assumed maintenance/refurbishments/furniture depreciation etc. over the 5 years: €20k

Total cost of living in the house for 5 years: €181,502.70

Less equity in house after 5 years(assuming even distribution of capital and interest over 25 years): €28004

Cost of ownership = €153498.70 or €2558.32 per month

Now, that's a "worst" case scenario using rough figures.

Assuming the "best" case scenario where the house holds it's value firm at 300k, you'd be looking at

Cost of ownership = €53498.70 or €891.645 per month.

Just realised I also forgot to deduct the cost of selling the house at the end, working off 2% of property value, you'd be looking at an extra 6k in the best scenario or 4k in the worst.

So, unless the property appreciates over the 5 years, your best case scenario is paying roughly 1k per month for living there. TBH, I think renting's still the best option. You should be able to find something nice in Dublin for €800/€900 p.m.

Obviously, if you bought something you planned to own for the rest of your life, it's largely irrelevant as your home is only worth something on paper. Then it comes down to how much you'd regret the opportunity cost.

MaceFace

Tazz T wrote: »

Buying should always depend on your motivation, I believe. I bought at the height on the boom, even though I believed prices would fall because a. children b. I could afford it c. record low interest rates. However, I had a huge deposit, so the capital borrowed was low compared the price of the house.

If you motivation for buying now is for long term affordability then it's probably a good idea. Interest rates are definitely going to rise, so if you fix in for 3-5 years at a good rate now, you might be glad you did. Wait a couple of years and you may find that altho house prices didn't fall much further, interest rates are much higher, so that house puts more of a strain on your monthly finances. Have you been agreed for a loan? Banks are more careful about giving out mortgages at the moment. If you can get one now, you might consider going for it as tomorrow it might be even more difficult.

I'd bear in mind what other people are saying about rent though. It will be hard to rent a room and you could probably get a nicer place at the same price or even lower at the moment.

If it was long term, not for profit and I was able to get a good mortgage deal fixed long term and it left be better off each month, I'd go for it.

Do you have any regrets about it?
I am really not trying to be an assh0le about it, but I think it would kill me if I was bought at the height of it (I bought in 2003 so was lucky), and looked around today to see what I could have had if I waited the three years.

I just can't comprehend how anyone could think of buying today when it is likely that the value of what they are buying is depreciating by 3k a month (on a 300k house). Interest rates would have to go up by 14% to match that type of fall.:eek:

Sponge Bob

DeVore wrote: »

I must admit I feel like I must be mad to consider it at this time...

Have a very cold shower and look at it in a years time. Meanwhile watch this site below very closely. What were these €300k houses at the peak in early 2007 , 3 years ago ??

http://www.irishpropertywatch.com/

MaceFace

Sponge Bob wrote: »

Have a very cold shower and look at it in a years time. Meanwhile watch this site below very closely. What were these €300k houses at the peak in early 2007 , 3 years ago ??

http://www.irishpropertywatch.com/

Indeed, and even better, find the price of a house in 1996 when the market was at a normal level, adjust it for inflation and see where it should be.
Someone done this on another thread that I can not find and if things have of increased, at what would be international standards, a normal level, the average price of a house in Ireland today would be about 110,000.
Considering we are double that now, please someone tell me why oh why would house prices level off now considering we are over valued based on what would be considered a normal market, and we have higher interest rates, repossessions, no drop in unemployment forecast, increase in long term unemployed, tax increases, pay cuts for government employees.

Just amazing that anyone would think of buying a house today.
Just don't turn around in two or three years time saying that no one was warning that there were further cuts to come.

Then again, what's the saying? Oh yeah, one born every minute.

Read thepropertypin for one hour and then tell me your not convinced I am right.

Idbatterim

If prices even drop 10% you are looking at a 30k loss! Plus the interest you will have to pay if houses continue to lose value. On top of that think of the interest you will lose by buying instead of saving. I think anyone thinking of buying now is mad, unless the seller is desperate and the price is very attractive or if there is a firesale on long term propertys. Also dont forget that once you buy you will lose your FTB status.

wowa

Madder than a brush! My sentiments entirely but nobody on here knows your situation or risk taking behaviour which is what the purchase of ahouse ultimately boils down to.

I have a good income and dare I say it, a job for life, but would I ever buy a house in Ireland? No. The country has clearly been fueled by corruption and immoral favours over the past 10 years. This is not going to change over night leaving mere mortals exposed as much as ever. House prices are not going to realise their necessary value because of NAMA.

I suspect the price correction so far is the tip of the iceberg. If not, the country will turn into landlords and tenants once again. I suspect the latter and there is no need to jump to the conclusion that this will be a bad thing. While it is every individuals right to have a roof over their head, it is not their right to own that roof.

Colonel Sanders

dan_d wrote: »

Prices will fall further but interest rates will rise.
If you can afford the repayments, and you're buying to live in for a long period of time then go for it. The price of a house only matters on the day you buy and the day you sell. Once you buy, and you don't intend to sell, then it doesn't matter.

This is often a phrase thrown around and I disagree

For a start if you pay 300k for an asset that subsequently depreciates to 250k then you have set fire to 50k+ interest

Another way to debunk the 'negative equity is only a problem if you have to sell' myth is that if you are in negative equity you would find it very hard (impossible?) to switch lenders in future in search of a better deal

jmayo

People have talked about rents falling, but how many people here ever think that the taxpayers are indirectly keeping an artifical floor on rents in many areas of this country through our governments generous rent allowance schemes for the unemployed, the sick, the unmarried single mothers, etc.

Why hasn't the rent allowance been cut due to the volume of available properties ?
Is it because the current government are so entrenched within the property business (say hello mr farnk fahey) that they haven't done this ?
Would a FG/Labour government cut the allowances ?

If someone seriously cuts this budget then rents in this country will drop drastically, so this I feel is yet another reason not to buy if you are thinking about having a property as investment if you were to emigrate in a few years.

Colonel Sanders

I have uploaded a spreadsheet for loan calcs

The figures on the extreme left can be played about with to see how different terms, loan to values, interest rates, amounts borrowed will affect the amount paid back in interest. Only update the cells highlighted in yellow

The 'Cost of house' is deposit + principle repaid + interest

I have only set it up to show the entire loan at a single interest rate (not very realistic). If I get time later I'll set it up so that you can enter a different nnual APR for each payment

Amhran Nua

Sleepy wrote: »

Most of the overhang is in the middle of nowhere and of low quality and NAMA are already talking about demolishing uncompleted developments so I'm not sure how much of an influence this will be on the second hand market.

I'd disagree with the idea that the overhang is in the middle of nowhere. I'm living in an estate about twenty minutes walk to the centre of Galway, ten minutes to the beach, and there are a half dozen houses out of ~190 here sitting empty for sale, and have been for the last year. Four beds are going for €200k. The influence will be significant, you can't discount that much of an overhang. Also see thread here.

astrofool

jmayo wrote: »

Why hasn't the rent allowance been cut due to the volume of available properties ?
Is it because the current government are so entrenched within the property business (say hello mr farnk fahey) that they haven't done this ?
Would a FG/Labour government cut the allowances ?

FG probably would, Labour would double the current level (and add a zero) as we all become "vulnerable".

Sleepy

Amhran Nua wrote: »

I'd disagree with the idea that the overhang is in the middle of nowhere. I'm living in an estate about twenty minutes walk to the centre of Galway, ten minutes to the beach, and there are a half dozen houses out of ~190 here sitting empty for sale, and have been for the last year. Four beds are going for €200k. The influence will be significant, you can't discount that much of an overhang. Also see thread here.

I'm not saying all of the overhang is in leitrim but there's an awful lot of it built 'withing commuting distance of Dublin' (i.e. 2 hours each way) that's never going to sell for much more than the agricultural value of the land.

You could make the argument that a lack of employment opportunities in Galway has driven many of us of house-buying age out of the market there (I'm originally from Knocknacarra). 6 houses out of 190 odd isn't anything to be overly concerned about. They'll sell when the owners get realistic about what they're worth.

Some of the overhang will obviously have an influence on prices but with so much of it being almost worthless in terms of where it's been built, I don't see it equating to 5 years overhang. One thing I think will almost certainly come out of this alteration of the market will be a move back away from appartments. With so many burned badly on their 'get on the property ladder' shoeboxes I can't see too many first time buyers going for appartments in the near future - they'll want the 3/4 bed semi that can accomodate changes to their lives over the medium to longer term (i.e. having kids). This will lead to more of the overhang being useless to the demands of the market for housing in coming years.