Am I mad to buy now?

efb

Interested in a house, happy with the price, am I mad to buy now?

Its near my parents and come down alot from the asking price.

Blackjack

Probably. If you wait longer, Property will cost you a lot less.

Mr. Loverman

efb wrote: »

Interested in a house, happy with the price, am I mad to buy now?

Not mad, but it does not make financial sense to buy now.

efb wrote: »

Its near my parents and come down alot from the asking price.

Forget about the original asking price. The prices around the bubble, and for the past few years, were insane. You should not compare prices to them when determining value.

If you can tell us more about the property (location, size, type of property, etc.) we will be better able to advise you.

Few things to ask yourself
- are you in really stable employment, unlikely to relocate for work for the next 10 years
- does the house have enough space should you have kids etc
- Whatever the mortgage payment will be could you afford to pay €300/ €400 more per month should interest rates rise drastically

Also keep in mind the current asking price may still be far too high and no one else may be at all interested in it so don't rush in and don't swallow any sh1t from the auctioneer.

ArraMusha

Have a read of this ...particularly 'treehouse's post which sums up the state of affairs related to house prices..

http://www.boards.ie/vbulletin/showthread.php?t=2056037903

efb

Well it would cost more to build the property now, than to buy it and there's huge development potential.

Why does it not make financial sense to buy now?

Newaglish

efb wrote: »

Interested in a house, happy with the price, am I mad to buy now?

Blackjack wrote: »

Probably. If you wait longer, Property will cost you a lot less.

efb wrote: »

Why does it not make financial sense to buy now?

efb

Newaglish wrote: »

I just cant see how it would cost less, there is no house its size or quality in the price range and my other option was self build so this is cheaper.

Should I put in an offer of asking price less 10%

Mr. Loverman

efb wrote: »

Why does it not make financial sense to buy now?

You need to spend a few weeks reading http://www.thepropertypin.com

Mr. Loverman

efb wrote: »

I just cant see how it would cost less, there is no house its size or quality in the price range and my other option was self build so this is cheaper.

Land prices going down?
Builders prices going down?
Materials prices going down?

Come on, think about it.

tenchi-fan

When property prices begin to rise they could jump 10-20%. However, don't expect that to happen for many years! They could continue to fall in the meantime but realistically, how much you they fall? Considering that the alternative is to pay a lot of rent. And interest rates are still relatively low. Now's the time to buy if you get a good price.

A good tip is to put in an offer - immediately! A ridiculously low, derisory offer. About 30% less than the price you think you are happy with. Just to see what they say. And don't just make an offer on that house.. go around all the estate agents and make as many offers as you like, all low, and hopefully you will get a bargain. if they tell you to take a hike, just keep an eye on it and perhaps make another offer a month later, only slightly higher. Go as far as giving the deposit if you like - it's not going to make any difference until you actually sign along the dotted line.

Mr. Loverman

tenchi-fan wrote: »

Now's the time to buy if you get a good price.

The amount of times I've head that over the past few years... everyone who tried to give me that advice is now in deep negative equity.

efb

Thanks guys, I appreciate all the advice esp the explained ones rather than the kurt one liners.

I think I will make an offer in the morning of AP less 10% - well beneath my threshold and if they dont like it this 30 year old will stay at home.

Mr. Loverman

efb wrote: »

Thanks guys, I appreciate all the advice esp the explained ones rather than the kurt one liners.

I think I will make an offer in the morning of AP less 10% - well beneath my threshold and if they dont like it this 30 year old will stay at home.

Why 10%?

You do realise prices have supposedly dropped 9% in the past 5 months alone?

Most sane economists think the recession is going to last a few more years, so that's a lot of 5 months...

By all means pay whatever you want, but if you do it without doing proper research you will only have yourself to blame when you're in negative equity.

efb

Because they dropped the price by 25% last week

efb

Mr. Loverman wrote: »

Why 10%?

You do realise prices have supposedly dropped 9% in the past 5 months alone?

Most sane economists think the recession is going to last a few more years, so that's a lot of 5 months...

By all means pay whatever you want, but if you do it without doing proper research you will only have yourself to blame when you're in negative equity.

I am not buying it as an investment, I am buying somewhere to live for the next 30 years.

Another thing to keep in mind is that there is an awful lot of folk out there who could never afford their own place when things were good, now things are bad they still have f all chance of doing so. Many of these folk would love their own house but know it's not going to happen, these folk love typing about negative equity and how low house prices may still get Personally I don't have a clue how the property market will go.

efb

I think I'll talk with a QFA too

Mr. Loverman

efb wrote: »

Because they dropped the price by 25% last week

That really means nothing.

efb wrote: »

I am not buying it as an investment, I am buying somewhere to live for the next 30 years.

Fair enough, negative equity is irrelevant if you plan to stay in your home and are certain you won't be forced to sell.

Mr. Loverman

RoverJames wrote: »

Another thing to keep in mind is that there is an awful lot of folk out there who could never afford their own place when things were good, now things are bad they still have f all chance of doing so. Many of these folk would love their own house but know it's not going to happen, these folk love typing about negative equity and how low house prices may still get.

I don't think that's the case at all.

I am bearish about the market because it is obvious.

I could easily afford a decent house in Dublin.

efb

Mr. Loverman wrote: »

That really means nothing.




Fair enough, negative equity is irrelevant if you plan to stay in your home and are certain you won't be forced to sell.

You said prices dropped 9% I was showing how Im not paying a 2007 or 8 price, cetainly not, the next house is €20K dearer, and a semi d.

Mr. Loverman

efb wrote: »

You said prices dropped 9% I was showing how Im not paying a 2007 or 8 price, cetainly not, the next house is €20K dearer, and a semi d.

Yes, but property in Ireland is still insanely overpriced.

We have about another 50% to go.

Mr. Loverman

Mr. Loverman wrote: »

I don't think that's the case at all.

I am bearish about the market because it is obvious.

I could easily afford a decent house in Dublin.

I was not on about you specifically, although most of the folk I am on about do come out with the "I could easily afford ......................"

Blackjack

RoverJames wrote: »

I was not on about you specifically, although most of the folk I am on about do come out with the "I could easily afford ......................"

I could easily afford a 3 Bedroom Semi D in almost all parts of Dublin.

I'm waiting until they're a lot cheaper, so that I can buy a 3 Bedroom Semi D in All parts of Dublin, and maybe even something a little bigger.

efb

Mr Loverman,
I am not questioning you for 1 second, I just want to put a weight behind people's opinions, and yours is quite strong, what is your field of of work?

Blackjack

Blackjack wrote: »

I could easily afford a 3 Bedroom Semi D in almost all parts of Dublin.
.

How old are you and what do you do for a living ?

Blackjack

RoverJames wrote: »

How old are you and what do you do for a living ?

Old enough to know that now is not a time to buy, and wise enough not to tell people what I do on the Internet....

I'm not a first time buyer if that makes any difference.

Mr. Loverman

efb wrote: »

Mr Loverman,
I am not questioning you for 1 second, I just want to put a weight behind people's opinions, and yours is quite strong, what is your field of of work?

Statistics.

You are right, my opinion is very strong, but that's because I think what's happening is so obvious, and frankly has been obvious for years.

Write down the average wage on a piece of paper and then multiply that value by about three and a half. Historically that's how much it should cost to buy an average home, e.g. a three bed semi-d.

So when I say an average three bed semi-d will cost 150k I am being optimistic.

When thinking about property you need to completely ignore 2002 - 2010. They are the insanity years and have little bearing on reality.

tenchi-fan

Mr. Loverman wrote: »

The amount of times I've head that over the past few years... everyone who tried to give me that advice is now in deep negative equity.

Obviously they didn't get a "good price"!

Mr. Loverman

tenchi-fan wrote: »

Obviously they didn't get a "good price"!

They thought they did though... that's why I think most people shouldn't make decisions based on what they think is a good price.

barochoc

I agree with Loverman, Property here has been way over valued for so long, we're still a long, long, long way off correction.

About 15 years ago I could buy an apartment in the City center for around £40-50K. I thought this was insane because Semi-D's where I lived where around that price.

I held off for a bit & didn't take much notice of Property as I was only 20 so didn't really want to commit but my Father was pushing me. What is it with Irish People & "You must own a property"???????

Anyway, only a few years later things were really picking up in the economy & it seemed everywhere you looked someone was building or buying a house. I decided to have a look & nearly got sick when I seen people pay £100K+ for a house that was only £50K 4-5 years ago. That was WAY too much inflation for me & I couldn't justify it because the people I knew with Mortgages only payed maybe £250-300 a month over 15-20 years which was a very small fraction of their wages. It was no way Jose for me!

Fast forward about 10 more years & it spirals out of control with people paying €2000-3000+ a month on their mortgage over the same term with some poor feckers having to lessen the load... say €1500 per month over 25-30 years!!! I was & still am disgusted at how this was allowed to happen :mad:

Anyway, we're borrowing at stupid interest now because our credit rating is slaughtered. We're no where near this recession bottoming out yet. Very few people are willing to buy houses because they're looking at all those around them struggling & almost suicidal because they'll never see their property fully recover before they retire & they're stretched to the limit.

There's no doubt in my mind what so ever that we'll see a further 25-30% drop in the next year or two because supply far outweighs demand at the moment & the banks have NO money to lend.

So, If you have a spare couple of hundred grand lying around & are afraid it will rot then go for it. If you're the type to feel bitter & hard done by when the price of your property falls by 20-30% then don't!

Why would you want to pay someone 20-30% more for something than it's already worth (And that's just a conservative figure it'll possibly be 50% cheaper in 4-5 years)?

Keep your money for a while longer. Put more away each month towards a deposit in a few years. This will be the time where the bank will probably be knocking on your door to offer you the money as they'll be desperate to kick off again.

Just my tuppence worth

efb

Mr. Loverman wrote: »

Statistics.

You are right, my opinion is very strong, but that's because I think what's happening is so obvious, and frankly has been obvious for years.

Write down the average wage on a piece of paper and then multiply that value by about three and a half. Historically that's how much it should cost to buy an average home, e.g. a three bed semi-d.

So when I say an average three bed semi-d will cost 150k I am being optimistic.

When thinking about property you need to completely ignore 2002 - 2010. They are the insanity years and have little bearing on reality.

3.5 actually gets e to my asking price!

Mr. Loverman

efb wrote: »

3.5 actually gets e to my asking price!

Sounds good so.

Enjoy!

efb

Mr. Loverman wrote: »

Sounds good so.

Enjoy!

Thanks.

Will put in the offer tomorrow and leave the ball in their court, go to Spain and enjoy my holiday!

Senna

efb, the mortgage been 3.5 times your wages mean that you wont be stretching yourself, but has little reflection on value. We dont know the house or area, so only you can judge that.
The question you have to ask yourself is, if you buy the house now and the price of the house next door is 10% or 20% less in a years time, will you still be happy with your decision?

johndaman66

Mr. Loverman wrote: »

Land prices going down?
Builders prices going down?
Materials prices going down?

Come on, think about it.

Land prices may well be going down and so too may builders prices, or at least the cowboy builders prices but materials prices?... Maybe you'd want to recheck that one. Glass, timber and concrete certainly ain't going down in price to at least name a few.

Mr. Loverman

johndaman66 wrote: »

Glass, timber and concrete certainly ain't going down in price to at least name a few.

Why won't these go down in price - surely supply and demand determines their price?

johndaman66

Mr. Loverman wrote: »

Why won't these go down in price - surely supply and demand determines their price?

Yes fair enough but bear in mind that Ireland is a small open economy too. Much of our building materials is imported and even much of the building materials produced here is exported. Just because demand in the domestic economy is not as strong here is does not automatically follow that the prices of building materials will drop for afore mentioned reason. Although I can't say Ive an index for building material prices immediately available to hand I can pretty much guarntee you that if you went into Brooks or Heiton Buckleys with a shopping list tomorrow for a broad spectrum of building materials the quote they will give you will be higher than it was 2/3 years ago.

Mr. Loverman

Mr. Loverman wrote: »

Why won't these go down in price - surely supply and demand determines their price?

Come on, think about it

Mr. Loverman

johndaman66 wrote: »

Yes fair enough but bear in mind that Ireland is a small open economy too. Much of our building materials is imported and even much of the building materials produced here is exported. Just because demand in the domestic economy is not as strong here is does not automatically follow that the prices of building materials will drop for afore mentioned reason. Although I can't say Ive an index for building material prices immediately available to hand I can pretty much guarntee you that if you went into Brooks or Heiton Buckleys with a shopping list tomorrow for a broad spectrum of building materials the quote they will give you will be higher than it was 2/3 years ago.

RoverJames wrote: »

Come on, think about it

You're actually both wrong.

A quick bit of googling throws up loads of results about building materials going down in price in Ireland.

Some materials have increased in price, but overall they have been going down for the past three years.

Random quote:

"Building and Construction All Materials Prices decreased by 4.8% in the year since October 2008".

No offence, but it's a bit naive to think prices can't go down. That's the sort of mentality which got Ireland into the mess it's in.

magentas

efb wrote: »

I am not buying it as an investment, I am buying somewhere to live for the next 30 years.

I think that's what it all comes down to, you're buying a home not an investment.

The "don't buy now" bridgade shouting "negative equity" is irrelevant to someone looking to spend the rest of their lives in this house.

efb, if you can comfortably afford it and are 100% happy with the house and have done all your research then go for it

only thing I'd recommend is to get a good fixed rate so you will know your repayments for first few years as interest rates look to be unstable for the foreseeable future

don't be embarressed to put in a relatively low offer, this is the biggest purchase you will ever make

Best of luck and let us know how you get on;)

Treehouse72

NOBODY ON THIS FORUM IS TALKING ABOUT PROPERTY INVESTMENT.

It might just sound like it. Talking about buying at a good price is simply a proxy for codifying improvements in your QUALITY OF LIFE over the lifetime of the mortgage. It is NOT a form of property investment advice. Just because it is your PPR does not mean the price doesn't matter.

Why on earth do people find it so hard to understand that if you buy at €300,000 and the price drops 20% subsequently that that is €60,000 in principle added to your mortgage and maybe twice that amount once interest, fees and charges are included. Is advising you not to spend €100,000 property investment advice? Or is it advice to try and put €100,000 in your pocket to spend on holidays, time off work, a university education for your children, a pension, or a big stupid Ferrari if that makes you happy? Come on, for the love of Christ this is simple bloody logic.

If a Mars bar cost €5 and someone advised you not to pay this much, would you turn around and say "But I want some chocolate so I'm going to buy it"? No. You'd either forego your desire or you'd go out and buy a Doubler Decker instead. Is this investment advice? Or is it advice that the opportunity cost of that chocolate bar is too high?

And for Mars bar read an overpriced house, for Double Decker read renting or deferring the buying decision for 12 months.

Whatever. People come onto this forum to have their decisions justified, not to seek advice. OP in this thread is an example. He/she has not engaged with any of the advice not to buy and has dismissed it out of hand. Fine, onwards and downwards.

Zamboni

Treehouse72 wrote: »

Whatever. People come onto this forum to have their decisions justified, not to seek advice. OP in this thread is an example. He/she has not engaged with any of the advice not to buy and has dismissed it out of hand. Fine, onwards and downwards.

Yep.
I'm genuinely surprised these threads are still coming up.

McTigs

Yeah to be honest by now i am just exausted with people saying that "it's a house to live in for life not an investment so the price doesn't matter"

OF COURSE IT ****ING MATTERS!!!!!!

As treehouse has said in several times in various threads, and it's not complicated, why overpay for a house and deny yourself all the things both tangible and intangible that saving the difference can bring.

Whether or not you ever plan to sell those house on or not is completely irrelevent.

But ya know what, do what ye like, i know what i'm doing

efb

Quelle Suprize, the original bidder now has access to the cash, so I said to the auctioneer, I hope he's happy in his new house.

I'm not entering a bidding war in a recession!

I'm holding fire now 'til post Dec 7, 2010

Mr. Loverman

efb wrote: »

Quelle Suprize, the original bidder now has access to the cash, so I said to the auctioneer, I hope he's happy in his new house.

I'm not entering a bidding war in a recession!

I'm holding fire now 'til post Dec 7, 2010

Well done.

The other bidder could easily be a ghost bidder... please let us know if the estate agent rings you back saying the other bidder has mysteriously dropped out...

johndaman66

Mr. Loverman wrote: »

You're actually both wrong.

A quick bit of googling throws up loads of results about building materials going down in price in Ireland.

Some materials have increased in price, but overall they have been going down for the past three years.

Random quote:

"Building and Construction All Materials Prices decreased by 4.8% in the year since October 2008".

Please provide me with a link to back up above, as speaking from the point of view of somebody who is aware of the very most of the range of building material prices over the last number of years your point is at odds with the reality of the situation from my experience.

Mr. Loverman wrote: »

No offence, but it's a bit naive to think prices can't go down. That's the sort of mentality which got Ireland into the mess it's in.

Eh? I dont for one minute think that the prices of houses cant go down as they are falling presently and likely for some time to come. But if we are talking about construction prices for new houses then a distinction needs to be made. As we have already established this is predominantly made up of land prices, labour prices and material prices. It seems that land prices for residential purposes are going down but not easy to make an exact judgement on this either as there is so little activity happening in this regard and such information is not readily available for public consumption either. Labour prices, as I say perhaps maybe for cowboy builders but for the reputable builders....I'm not so sure...will need convincing. As for material prices and as I mentioned would like to see a link to back this up as your point seems to be at odds with the reality. I don't believe I'm being naive, rather looking at the reality of the situation of whats happening.

Also not sure of the exact date and these things change in the interm but last time I heard it was 2015...From this date all new builds in Ireland are required to be energy neutral. A quick read of the planning and constrution forum and you might be unpleasantly surprised with the hugh cost of geothermal, solar panels, wind turbines and the like.

efb

Mr. Loverman wrote: »

Well done.

The other bidder could easily be a ghost bidder... please let us know if the estate agent rings you back saying the other bidder has mysteriously dropped out...

will do, I'd say "the cash flow probs would return..."

Mr. Loverman

johndaman66 wrote: »

Please provide me with a link to back up above, as speaking from the point of view of somebody who is aware of the very most of the range of building material prices over the last number of years your point is at odds with the reality of the situation from my experience.

Here's the link: http://www.kmcs.ie/KMCS%20Construction%20Industry%20Outlook%202010.pdf

Doing some more googling I'm finding conflicting information. Some reports are saying prices have gone up, some are saying they have gone down, and some are saying they are fluctuating.

Regardless, I don't buy into the theory that buildings materials won't decrease due to less demand.

johndaman66

Mr. Loverman wrote: »

Here's the link: http://www.kmcs.ie/KMCS%20Construction%20Industry%20Outlook%202010.pdf

Doing some more googling I'm finding conflicting information. Some reports are saying prices have gone up, some are saying they have gone down, and some are saying they are fluctuating.

Regardless, I don't buy into the theory that buildings materials won't decrease due to less demand.

Ok, fair enough the article does suggest that building and construction material prices fell by 4.8% in the year October 2008 to October 2009 of which I would actually be sceptical but will take it at its face value all the same. However, it does say that this trend has changed recently (article being published in December 2009) and in October 2009 prices increased by 0.2%. It further goes onto say and I quote:

[/QUOTE]It is expected that Global economic conditions over the next 12 months will improve and due to a consequent increase in cost of globally traded commodities an increase in input costs will pass through to the Irish market. This has started to happen as illustrated by the recent increases in the Building and Construction Material Wholesale price Index[/QUOTE]

As you say yourself there are also other articles to show conflicting information and judging by my own personal experience I would seriously question if there were any price decreases over the past few years. My over-riding point is that in the scheme of things demand in Ireland would have very little impact on material prices be they in Ireland or elsewhere. A fair amount of our material inputs are imported. Changes in exchange rates can obviously have a hugh impact on price of building materials imported from UK or timber from Scandanavia for example. As the somewhat out of date article says material prices are expected to rise through 2010. Think furthermore the article is looking more specifically at infrastructe projects and larger commercial building projects with reference made specifically to reinforcing metal and structural steel but I'm getting pedantic now:D

Don't really want to be splitting hairs with you over this either and we are going of in a tangent from OP's initial query also. Point is that construction costs may (may not) be going down overall but I don't feel it wise to lump in input materials in this forecast.