Looking at buying my first place

lad12

Hi Guys,

I have been looking at buying an apartment in dublin and the one I'm looking at is for sale at around 190k.

This apartment has been for sale for over a year now and originally went on the market for nearly 280k.

Do you think an offer of around 150k would be cheeky at this point? - I have read that you should start at around 15% under the listed price which would be around 170k mark. Is this realistic?

Also friends have told me that I would be mad paying that kind of money on an apartment. What would your opinions be on buying a 1 bed apartment in the current market? its about 49 square meters in size.

The mortgage repayments would be cheaper then the rent i'm paying at the moment. I have also read that you should stress test your finances for the current rate + 2.75%?

Finally whats your opinions on interest rate reaching 15% like in the 80s - Off the wall? or realistic?

Thanks for reading!

TheInquisitor

A one bed for 150k? My god man are you mad!

Their selling 2 bed's in limerick city centre for 60k and cant even get rid of them!

Dades

Madness (imo) to be buying anything other than a home-for-life at the moment.

Buy a one bed, and if (as) prices keep dropping and then bottom out for a long time you could be stuck there for a lot longer than you'd like.

It may look cheap, but that's only relative to the stupid inflated prices we got used to.

Icepick

Offer 100k.

namurt

So tempted to pimp the property I'm trying to sell here.

lad12

Thanks for the responses!

A lot of the 1 bed apartments in Dublin are still advertised at around the 200k mark! I presume they aint selling many though.

TBH I dont think there is much interest in this property as it has been for sale for well over a year so would I better to sit it out for another few months to see if there are further drops in price?

I really like the area the area in dublin that the apartment is in and I do think i could rent it out in the future.

I cant see the guy selling it going for a 100k when its advertised 195k but I could be wrong!

Somebody already suggested to me that around the 120k bracket for a 1 bed apartment in dublin.

Surely prices of property will come back in the next 15 to 20 years - these bubbles go in cycles dont they? just got to find the next one :-)

antiskeptic

lad12 wrote: »

Hi Guys,

I have been looking at buying an apartment in dublin and the one I'm looking at is for sale at around 190k.

This apartment has been for sale for over a year now and originally went on the market for nearly 280k.

Do you think an offer of around 150k would be cheeky at this point? - I have read that you should start at around 15% under the listed price which would be around 170k mark. Is this realistic?

Also friends have told me that I would be mad paying that kind of money on an apartment. What would your opinions be on buying a 1 bed apartment in the current market? its about 49 square meters in size.

The mortgage repayments would be cheaper then the rent i'm paying at the moment. I have also read that you should stress test your finances for the current rate + 2.75%?

Finally whats your opinions on interest rate reaching 15% like in the 80s - Off the wall? or realistic?

Thanks for reading!

Apartment overhang yet to be released to the market far exceeds housing overhang yet to be released. When/as it is released, the effect will be to widen the post-peak loss gap between houses and apartments. Unless you're very well researched and know you're way ahead of the posse on this one then the cheapest thing to do is wait until you are well researched.

I wouldn't pay 150k for a space that small. Spread the net and make some low offers on a range of properties that you like and see what bites. It's not a direct comparison but on a recent holiday, some villa owners were prepared to offer 50% discounts for the last-minute booking, other just 10%. Catch someone at the right place and time and you could get a proper steal.

In the meantime, I'd search around and see could I get cheaper rent. Even the 'threat' of leaving might be sufficient to prise a reduction from your current landlord. In this market, stable occupancy has worth to stretched landlords.

Interest rates are tied into Europe. Peak post-war European rates (read: German) maxed out at around 8% iirc. Those 15% day belonged to a banana-economy (Ireland out on it's own)

antiskeptic

lad12 wrote: »

TBH I dont think there is much interest in this property as it has been for sale for well over a year so would I better to sit it out for another few months to see if there are further drops in price?

Conservative estimates for housing market price decline are running at about 12% per annum at present. That's about 22k p.a. on this apartment.

It's unlikely that the savings made between your current rent and a mortgage would amount to the savings you'd make by just sitting tight.

The_Conductor

Rents have not mirrored the drops in residential prices (yet!!!!)
Rents are being artificially held up through the various government subvented supports (notably RA and RS). The proposals are for an across the board cut in RA and RS of 20%- which might seem harsh- but given that the bulk of the market now falls into this category- and the terms of the 2004 act allow for an annual review at market rates, its a given that any cuts in these schemes in the forthcoming budget, will push through a comparable cut in open market rents, in all but the highest demand areas........

OP- the fact that your mortgage payment will be less than what you're paying in rent currently- means absolutely nothing. The headline mortgage payment is only one of the costs of ownership of a property- admittedly the largest cost- but other costs such as Management Charges in apartments etc- can add up to as much as 3-4 months mortgage payments.

Will there be a demand for apartments in Dublin- yes, there will. While its difficult to quantify- its reasonable to assume that any freehold residential property will be worth a multiple of the price of an apartment in the exact same area, when the dust settles.

Also- regarding finances- banks and other lending institutions will typically now only lend 60% of the value (that they put on) an apartment (which has absolutely nothing to do with the price the vendor is trying to get for the property). This ties in with the above- there is an expectation that apartment prices will fall far further than house prices, and likely never ever recover. Its the banks way to protect their investment- by making you save a 30-40% deposit for the property.

Personally- I don't view the fact that your current rent is more than a current mortgage repayment might be- as anything other than a random observation- and I certainly wouldn't give it any weight in an argument that therefore you should buy........

Regarding mortgage rates- the ECB overnight rate is currently 1.25% and is due to rise to 1.5% in July- with an increasing probability of at least 2 further rate rises before the end of the year. Their sole mandate is to fight inflation- with a target of 2% and eurozone inflation is currently running just shy of 3%.

Normalisation of interest rates is considered to be an ECB overnight rate of 4.5%. Add a 2% margin for a lender onto this- and you're looking at a headline rate of ~6.5%, this is what you should consider as 'normal'
If you try to fix for 5 years now- you're looking at a rate of 5.8% (Bank of Ireland) a little shy of the 6.5%, but getting there.

I genuinely don't see any upside to buying an apartment in Dublin at the moment- you're young, the economy has a whole lot of hurt ahead of it, the country is bankrupt- and our pressure valve is immigration. If you tie yourself to an apartment in Dublin- you are closing off a lot of options that you might see as good choices in the not so distant future......... Me- if I didn't have two young children, a secure but poor paying job, and a roof over my head that I bought over a decade ago- I'd be off to Canada like a shot. Its sad- but you really need to make sure you do not close off these avenues for yourself without giving them the due consideration that they deserve.

Theboinkmaster

smccarrick wrote: »

Rents have not mirrored the drops in residential prices (yet!!!!)
Rents are being artificially held up through the various government subvented supports (notably RA and RS). The proposals are for an across the board cut in RA and RS of 20%- which might seem harsh- but given that the bulk of the market now falls into this category- and the terms of the 2004 act allow for an annual review at market rates, its a given that any cuts in these schemes in the forthcoming budget, will push through a comparable cut in open market rents, in all but the highest demand areas........

OP- the fact that your mortgage payment will be less than what you're paying in rent currently- means absolutely nothing. The headline mortgage payment is only one of the costs of ownership of a property- admittedly the largest cost- but other costs such as Management Charges in apartments etc- can add up to as much as 3-4 months mortgage payments.

Will there be a demand for apartments in Dublin- yes, there will. While its difficult to quantify- its reasonable to assume that any freehold residential property will be worth a multiple of the price of an apartment in the exact same area, when the dust settles.

Also- regarding finances- banks and other lending institutions will typically now only lend 60% of the value (that they put on) an apartment (which has absolutely nothing to do with the price the vendor is trying to get for the property). This ties in with the above- there is an expectation that apartment prices will fall far further than house prices, and likely never ever recover. Its the banks way to protect their investment- by making you save a 30-40% deposit for the property.

Personally- I don't view the fact that your current rent is more than a current mortgage repayment might be- as anything other than a random observation- and I certainly wouldn't give it any weight in an argument that therefore you should buy........

Regarding mortgage rates- the ECB overnight rate is currently 1.25% and is due to rise to 1.5% in July- with an increasing probability of at least 2 further rate rises before the end of the year. Their sole mandate is to fight inflation- with a target of 2% and eurozone inflation is currently running just shy of 3%.

Normalisation of interest rates is considered to be an ECB overnight rate of 4.5%. Add a 2% margin for a lender onto this- and you're looking at a headline rate of ~6.5%, this is what you should consider as 'normal'
If you try to fix for 5 years now- you're looking at a rate of 5.8% (Bank of Ireland) a little shy of the 6.5%, but getting there.

I genuinely don't see any upside to buying an apartment in Dublin at the moment- you're young, the economy has a whole lot of hurt ahead of it, the country is bankrupt- and our pressure valve is immigration. If you tie yourself to an apartment in Dublin- you are closing off a lot of options that you might see as good choices in the not so distant future......... Me- if I didn't have two young children, a secure but poor paying job, and a roof over my head that I bought over a decade ago- I'd be off to Canada like a shot. Its sad- but you really need to make sure you do not close off these avenues for yourself without giving them the due consideration that they deserve.

Excellent post - couldn't agree more

mconigol

OP, do you realistically see house prices rising by any considerable amount in this country in the next few years? I don't. They may not keep falling but I doubt they'll start to rise either so what's the hurry?

It may be frustrating to play the waiting game but that's far less frustrating than being stuck in some pokey 1 bed apartment with no means of escape!

I'm still stunned at the amount of people that try to convince me that I should be buying property now! Nobody has learnt a thing as far as I can see!

lainey316

I firmly believe no-one, not one single solitary person (even a downsizer), has or will make the right decision by buying a one-bed apartment for owner occupation. Leave them to the buy to let brigade, what remains of it!

Also 49sqm is very small to buy - fine one bed rental but as a long term proposition? And I'm saying that while looking at 68sqm houses.

I've no intention of making an opening offer higher than 25% off asking btw. Starting at 15% off leaves you very little room to maneuver.

jackal

Living in a 56sqm 1 bed just over a year, and as a couple we have totally run out of space. Our storage cupboard requires indiana jones style skills to get anything out of!

Its a lovely apartment in a lovely development but its just too small for long term living.

Yeah and those are crazy prices. Don't even think about buying an apartment until NAMA opens the floodgates, they are going to drop like stones.

ricman

There are many 1bed apartments going for 100k,what area is it in?Theres alot of empty apartments in dublin,they are more vunerable than houses in regard to falls in price.Go on daft.ie search for 1bed apartment dublin 130 k max.

Snakeblood

lad12 wrote: »

Hi Guys,

I have been looking at buying an apartment in dublin and the one I'm looking at is for sale at around 190k.

This apartment has been for sale for over a year now and originally went on the market for nearly 280k.

Do you think an offer of around 150k would be cheeky at this point? - I have read that you should start at around 15% under the listed price which would be around 170k mark. Is this realistic?

Also friends have told me that I would be mad paying that kind of money on an apartment. What would your opinions be on buying a 1 bed apartment in the current market? its about 49 square meters in size.

The mortgage repayments would be cheaper then the rent i'm paying at the moment. I have also read that you should stress test your finances for the current rate + 2.75%?

Finally whats your opinions on interest rate reaching 15% like in the 80s - Off the wall? or realistic?

Thanks for reading!

Apart from anything else, I had a 50 square meter apartment and it felt tiny. It also felt smaller when my girlfriend moved in. Think about the future.

lad12

Hi Guys,

Thanks for all the responses..So i've decided to sit tight and wait another while...The apartment we are looking at is in Clontarf..And I think yer right when you say 190k for an apartment looks good when you compare to the crazy prices of a few years back.. We are currently renting a similar one bed apartment and we are happy with the size of it tbh..

Also another 1 bed apartment has come up for sale in the same complex for 170k mark!

So we are going to hold on for another bit and see what happens in the market.

foxy06

I was going to buy a house last year and had to pull out for family reasons. Glad I did! The house was a 4 bed in the midlands for 165k we offered 160 :rolleyes: Silly move. When we pulled out we were informed by EA that the vendors had dropped the price to 150K. It since sold but I would imagine for a lot less than 150k. I have been keeping an eye on the property in the area since and houses that were way out of our budget are now well within it. My point is WAIT! Even if they only dropped by a grand or two imagine what that grand costs you in real terms over the length of the mortgage.

snowey07

Have you had a chat with a lender yet ? At the moment its not just about if you can afford the mortgage but what the bank think of the house etc.

Many banks will not lend on a 1 bed appt unless it is very very very below the average price . (Source - my bank )

lad12

snowey07 wrote: »

Have you had a chat with a lender yet ? At the moment its not just about if you can afford the mortgage but what the bank think of the house etc.

Many banks will not lend on a 1 bed appt unless it is very very very below the average price . (Source - my bank )

No I didn't bother after getting the sound advice on here. We had intended to go to the bank after viewing the place but with such negative feedback here we decided to wait and see what happens! I would like to buy a place around the area as we like it but we going to wait and see for now.

the groutch

I would sit tight for the moment
there's some nice looking 2 beds for about 220k, which would sell for about 200k now
if you save hard between now and next spring, by then some of these might have fallen to within your budget
and 2 bed will always resell better, and put you in good stead if you decide to settle down, and have a family