How long to live in first house?

El_Dangeroso

I'm looking for opinions on how far into the future you should envision living in the first house that you buy in this economy.

For example should a house be perfect for your needs for five years and then maybe re-evaluate? Or in this climate should you look at something to last 10 or maybe 20 years just in case you can't move for whatever reason?

The reason I ask is that I have found an apartment that would be perfect for my life right now, reasonably priced and very close to the city centre. However I am unsure if I will want to live in it 5 years from now, we all change as we get older and I may fancy a garden at that point and be willing to give up proximity to the city in return (not necessarily a more expensive property).

I'm not looking for a crystal ball into the future of the property market, just wondering what people's own preference would be were they in my situation.

djimi

Personally I think the best way to approach it is assume the property you buy now will be the one that you live in for the duration of the mortgage, or certainly until you have paid off a significant portion of the mortgage.

I would not be buying any property as a short term plan, especially something like an apartment that will not meet your needs as time goes on and you start a family etc.

Chris_5339762

I've heard it said on here that you should only buy a house if you are prepared to live in it for the next seven years.

That said, if you're willing to rent it out (and all the hassle that goes with it) once you move, then its not as big of a deal.

djimi

Chris_5339762 wrote: »

That said, if you're willing to rent it out (and all the hassle that goes with it) once you move, then its not as big of a deal.

Depends on the rental market. Given the costs associated with renting a property there are a lot of people out there who are losing money each month on their rental property. I certainly wouldnt be entering into a purchase with the viewpoint of seeing possible future rental as a safety net.

murphaph

When did we stop buying a house for the rest of our days in Ireland? The Germans still do it that way...very few sell up and buy something "up the ladder".

Tombo2001

Easy to think you can control these things.

There are bags of people living in apartments in Ireland that they bought to 'get their foot on the ladder' and are now stuck with for a long long time because of negative equity.

djimi

murphaph wrote: »

When did we stop buying a house for the rest of our days in Ireland? The Germans still do it that way...very few sell up and buy something "up the ladder".

When the notions of a "property ladder" and a "starter home" started to get bandied about. Whoever came up with the notion of buying a starter home to get your foot on the property ladder should be dragged outside and publically flogged. Pretty much drove this mania we seemed to develop for owning property at all costs which has now left the country in ****e.

Zamboni

Pure speculation but...
Potential FTBers are scared of their life of Negative Equity.
They see their contemporaries rotting in dogboxes shivering at the mention of interest rates on the news.
Renting provides security of mobility for employment which is extremely valuable in the current economic climate.
It will predominantly be offspring that pushes some to purchase.

valleyoftheunos

djimi wrote: »

When the notions of a "property ladder" and a "starter home" started to get bandied about. Whoever came up with the notion of buying a starter home to get your foot on the property ladder should be dragged outside and publically flogged. Pretty much drove this mania we seemed to develop for owning property at all costs which has now left the country in ****e.

I don't think that is fair at all. Starter homes more than serve their purpose for young, small families who only require 2 or 3 bedrooms and can't yet afford to buy or live in the larger homes they hope they will need in the future.

Bonus marks for OT rant about the economy:rolleyes:

El_Dangeroso

murphaph wrote: »

When did we stop buying a house for the rest of our days in Ireland? The Germans still do it that way...very few sell up and buy something "up the ladder".

djimi wrote: »

When the notions of a "property ladder" and a "starter home" started to get bandied about. Whoever came up with the notion of buying a starter home to get your foot on the property ladder should be dragged outside and publically flogged. Pretty much drove this mania we seemed to develop for owning property at all costs which has now left the country in ****e.

Where did I mention property ladder? I would buy a house of similar cost if I were to change, leveraged by the fact that it would be further from the city. Please re-read the original post.

El_Dangeroso

Also, to clarify I have no interest in becoming an accidental landlord.

Layinghen

Back in my day the house you bought was your home for the rest of your days, bar having to relocate if you got a work transfer. In the situation that we are in now I think you should be thinking very long term. If you feel you will want a garden and a house in the future and you can afford it now, get it now.

djimi

valleyoftheunos wrote: »

I don't think that is fair at all. Starter homes more than serve their purpose for young, small families who only require 2 or 3 bedrooms and can't yet afford to buy or live in the larger homes they hope they will need in the future.

Bonus marks for OT rant about the economy:rolleyes:

The problem with the more recent notion of a starter home is that it was not seen as a home for 10+ years, it was seen as a home for 2-3 years while property prices rose and people could sell and move onto something bigger and better. Hence the reason why people are stuck with one bedroom shoebox apartments that they cant get rid of. Short term buying replaced what should have been short-medium term renting. All well and good while property prices were good, but anyone should have been able to see that that would not last forever and it was a risky game to play.

I wasnt intentionally ranting about the economy; more so making a point that there are a lot of people out there now stuck in homes that they bought for a short term purpose, that are now no longer sufficient for their needs but they cant get rid of.

djimi

El_Dangeroso wrote: »

Where did I mention property ladder? I would buy a house of similar cost if I were to change, leveraged by the fact that it would be further from the city. Please re-read the original post.

Its essentially what you are asking; the idea of a property ladder came about by people having short term views to home ownership (that you could always trade up as and when the need came along), rather than buying with a view to buying with a view to remaining in the property for a long time. To me anyway, it doesnt necessarily mean moving to a more expensive property; just more the idea that each house you buy is a step along the ladder, rather than a long term investment.

pwurple

There's nothing unreasonable about the expectation that things may change and you might move house in the future. Expecting things to always inflate, and that you need to be on some ladder is a mistake. But there is nothing wrong with buying a place, and selling it when circumstances change. Freedom of movement is an essential part of life.

Plus, there is absolutely no point in paying for a 4 bed family house big commuting distance from where you work, when you are a single person. Live near your work, reduce commutes to zilch if you can. Quality of life improves dramatically when you don't commute, and your expenses are lower. You can pay that mortgage down faster by overpaying and reducing the term.

I originally bought in the city center where I worked. I was there 3 years. Then I got married, and we bought a place in the burbs together, worked in an industrial estate, burbs was near. 7 years there. We went abroad for a few years for work, and then moved back again. Time moved on again, we have a family now and need to be closer to our parents to help them out as they get older, so we are moving again.

Life moves along, needs change depending on your circumstances.

We are both private sector and work can easily move. If we were farming, or a teacher, or any number of jobs that stay in one spot, our movements would be much different.

El_Dangeroso

Layinghen wrote: »

Back in my day the house you bought was your home for the rest of your days, bar having to relocate if you got a work transfer. In the situation that we are in now I think you should be thinking very long term. If you feel you will want a garden and a house in the future and you can afford it now, get it now.

Back in your day people got a job for life and stayed in the same place until they died, times have moved on.

I don't want to live in the subarbs right now. In fact I can't think of anything I would dislike more. Having said that I am open to the fact that my mind may change on that front (as it also may not).

The apartment I am looking at is very spacious and far from a shoebox. I have no reason to think that I would want to not stay there for the duration, but I am trying to build in redundancy into my plan.

I have stress tested interest rate repayment to 9% which on my current salary I can afford, I can even handle a 20% drop in price without going into any substantial amount of negative equity.

El_Dangeroso

djimi wrote: »

Its essentially what you are asking; the idea of a property ladder came about by people having short term views to home ownership (that you could always trade up as and when the need came along), rather than buying with a view to buying with a view to remaining in the property for a long time. To me anyway, it doesnt necessarily mean moving to a more expensive property; just more the idea that each house you buy is a step along the ladder, rather than a long term investment.

You seem to be the only person in the world with that definition of property ladder:

The property ladder is a term widely used in the United Kingdom to describe the relative differences in constant terms from cheaper to more expensive housing.
According to this metaphor, an individual or family's lifetime progress can be traveled equally from cheap houses for younger first-time buyers who are typically at the bottom of the property ladder, and expensive houses are at the top. 'Getting on to the property ladder' is the process of buying one's first house and holding a place on the volatile property market.

Layinghen

Well you are absolutely right. I was only trying to point out how things have changed since way back in the last century! You are obviously very happy with your choice of apartment so go for it. I wish you every happiness in your new home.

djimi

El_Dangeroso wrote: »

You seem to be the only person in the world with that definition of property ladder:

Perhaps I am! I dont think Im explaining myself very well. You are trading up alright, just not necessarily to a more expensive house (as you say, you could upgrade your house and offset the increased cost by moving further from the city).

Either way, it wasnt meant as a dig at you personally, so please dont take it as such. My issue with the idea of a property ladder in the past few years is that people seemed to get this almost hysterical notion that they had to buy property, and I saw too many people in their early 20s, who should really have been renting, instead tying themselves into stupid mortgages on properties that were never going to be even remotely sufficient to their medium/long term needs, that they now cannot get out of, just because they were convinced that it was what they should be doing.

valleyoftheunos

djimi wrote: »

The problem with the more recent notion of a starter home is that it was not seen as a home for 10+ years, it was seen as a home for 2-3 years while property prices rose and people could sell and move onto something bigger and better. Hence the reason why people are stuck with one bedroom shoebox apartments that they cant get rid of. Short term buying replaced what should have been short-medium term renting. All well and good while property prices were good, but anyone should have been able to see that that would not last forever and it was a risky game to play.

I don't think Starter Homes were ever considered to be something to lived in for 10+ years, more like 5+. Equally I don't know that all the one bed apartments you reference were considered starter homes, step one on the property ladder for singletons alright. Your point about medium term renting is well made and in fairness anyone buying a one bed apartment (particularly any couple) would perhaps be being foolish in any property market.

djimi wrote: »

I wasnt intentionally ranting about the economy; more so making a point that there are a lot of people out there now stuck in homes that they bought for a short term purpose, that are now no longer sufficient for their needs but they cant get rid of.

Thats quite a lot to extract from the sentence

djimi wrote: »

Pretty much drove this mania we seemed to develop for owning property at all costs which has now left the country in ****e.

El_Dangeroso

djimi wrote: »

Either way, it wasnt meant as a dig at you personally, so please dont take it as such. My issue with the idea of a property ladder in the past few years is that people seemed to get this almost hysterical notion that they had to buy property, and I saw too many people in their early 20s, who should really have been renting, instead tying themselves into stupid mortgages on properties that were never going to be even remotely sufficient to their medium/long term needs, that they now cannot get out of, just because they were convinced that it was what they should be doing.

Yep, and I watched a lot of my friends do exactly that in their 20's. That's why I'm being extra cautious. Things change, I want to evaluate whether I can change with it and what would be a reasonable timeframe in which I could sell the apartment if I thought I wanted a change of scenery.

El_Dangeroso

Added a poll for clarity

Scortho

Personally ill be buying with the intention that this will be the home that ill raise my kids in and ultimately due in.
If 10 years into the mortgage I realise that I can now afford the red brick on Shrewsbury road well then I might consider moving.
But I'd never buy with the intention of selling in the short term.

Scortho

El_Dangeroso wrote: »

Back in your day people got a job for life and stayed in the same place until they died, times have moved on.

I don't want to live in the subarbs right now. In fact I can't think of anything I would dislike more. Having said that I am open to the fact that my mind may change on that front (as it also may not).

The apartment I am looking at is very spacious and far from a shoebox. I have no reason to think that I would want to not stay there for the duration, but I am trying to build in redundancy into my plan.

I have stress tested interest rate repayment to 9% which on my current salary I can afford, I can even handle a 20% drop in price without going into any substantial amount of negative equity.

Is the apartment suitable to raise an average sized family in the near future?
Could 2 adults and 2 children happily live there. Or would it be cramped and a crowded affair. Situations change. You could be young and single this week but next week you could meet someone. 2 years time your getting married and 4 years time you have a child. Would the apartment be suitable for that?

Personally I'd rent a bachelor pad until it came to the time of settling down and put additional money into a high interest savings account. Or buy a 3 bed semi-d that you can raise a family in in the near future.

Don't get me wrong there are apartments out there that are suitable for family life. They just happen to be a very small minority of the total stock of apartments in this country.

djimi

valleyoftheunos wrote: »

I don't think Starter Homes were ever considered to be something to lived in for 10+ years, more like 5+. Equally I don't know that all the one bed apartments you reference were considered starter homes, step one on the property ladder for singletons alright.

I guess Im thinking back to when I was younger and more my parents generation. It seemed to me that 20 odd years ago people bought a house when they got married with a view to starting a family in it. The house was bought with a view to their longer term needs, not just what would suffice in the short term. It didnt necessarily mean that they intended to stay in the house for the rest of their days, but likewise it meant that they didnt have to move in 2-5 years just because a couple of kids came along.

Contrast that to the last few years, where people in their 20s seemed to buy property that suited their immediate need (ie a single person buying a 1 bed apartment), but that was going to be very much insufficient should circumstances change down the line (as it is likely to do at that age). It just seems to me that this more short term view of a starter home has replaced the idea of buying when require something with a bit more longevity towards your life needs.

El_Dangeroso

Scortho wrote: »

Is the apartment suitable to raise an average sized family in the near future?
Could 2 adults and 2 children happily live there. Or would it be cramped and a crowded affair. Situations change. You could be young and single this week but next week you could meet someone. 2 years time your getting married and 4 years time you have a child. Would the apartment be suitable for that?

Personally I'd rent a bachelor pad until it came to the time of settling down and put additional money into a high interest savings account. Or buy a 3 bed semi-d that you can raise a family in in the near future.

Don't get me wrong there are apartments out there that are suitable for family life. They just happen to be a very small minority of the total stock of apartments in this country.

Thanks for your thoughts, unfortunately I'm neither young nor single!

I'm pretty settled in my life and really wouldn't envision that changing in the medium to long term. So in that regard the apartment would have enough space.

I think myself now I'm thinking I may want to change in around 7 years.

CelticRambler

The way djimi describes it is exactly how it's been in England since the 1980s. Sure, the ladder goes from "cheap" to "expensive" but that's because starter homes in the UK are pokey little boxes that might as well be described as "luxurious bed-sit". When I first went to England, I couldn't believe this mad urgency 20-somethings had to get onto the "property ladder", tying themselves into 25-year mortgages when they didn't know what they wanted to do or where they wanted to be in two years' time. All it did was make money for estate agents and banks with people constantly trading up one room at a time. Back then, I used to say to people how we had it right in Ireland: you rented as a student, you rented somewhere esle as an emigrant, and if you came back, you bought a decent house that could accommodate family and friends.

Then ye all went mad and got sucked into the UK model and look where it's ended up. There's really no reason to be looking at buying a small house if it's not going to be a place you'll keep. Seven years is supposedly the minimum to break even on your purchase and moving costs and "customisation" expenses; these days, I'd say it's more like ten-fifteen for people who bought in the Tiger years. If you're young and single, keep your freedom for another few years.

Grandpa Hassan

djimi wrote: »

Depends on the rental market. Given the costs associated with renting a property there are a lot of people out there who are losing money each month on their rental property. I certainly wouldnt be entering into a purchase with the viewpoint of seeing possible future rental as a safety net.

They aren't 'losing' money each month. Lot of scare stories going around about accidental landlords. I am one, and it's really not that bad.

If mortgage is €1600, and rent is €1,200, the shortfall per month is €400. Interest rates might go up, mortgage rates over time might go up with infaltion. Times that shortfall by, say, 20 years left on a mortgage, and that is €96,000. And you have a mortgage free property in 20 years that will be worth considerably more than that.

Sums are simplistic, but just illustrating that the accidental landlord is not 'losing' €400 a month.....it is just being forcibly invested.

So I have no problem in seeing future rental as a safety net

DubDani

We were always thinking long term, even though we are "foreigners". When we bought our first house recently we were looking for something within our Budget that would allow us:

- to cover the needs of our family until the kids leave the house (some 20 odd years to go)

- to be able to accommodate any unplanned family extension (be it a parent or kid) without negative effect on rest of family

- to be able to extend in case of emergency (accidental triplets )

- to fully pay it off within 10 years even if Interest rates go up.

In the current climate I would always advise to see whatever you buy as a long term investment and to choose accordingly.

I have friends who are stuck in 1 and 2 bed apartment with 2 small kids with no chance of trading up, due to negative equity. And I wouldn't wish that situation on my family or anyone else.

djimi

Grandpa Hassan wrote: »

They aren't 'losing' money each month. Lot of scare stories going around about accidental landlords. I am one, and it's really not that bad.

If mortgage is €1600, and rent is €1,200, the shortfall per month is €400. Interest rates might go up, mortgage rates over time might go up with infaltion. Times that shortfall by, say, 20 years left on a mortgage, and that is €96,000. And you have a mortgage free property in 20 years that will be worth considerably more than that.

Sums are simplistic, but just illustrating that the accidental landlord is not 'losing' €400 a month.....it is just being forcibly invested.

So I have no problem in seeing future rental as a safety net

Theres more cost associated with renting than just the mortgage. Take tax and other associated costs into account and you might end up recouping maybe half of your monthly outgoings on the property.

And call it whatever you like; to someone who is forced into being a landlord through necessity the idea of having to pay half the mortgage on the property from your own pocket amounts to the same thing as losing money each month! Looking 20 years down the road is not so easy to do when you have a property now that is financially crippling you.

Peanut2011

El_Dangeroso wrote: »

Back in your day people got a job for life and stayed in the same place until they died, times have moved on.

I don't want to live in the subarbs right now. In fact I can't think of anything I would dislike more. Having said that I am open to the fact that my mind may change on that front (as it also may not).

The apartment I am looking at is very spacious and far from a shoebox. I have no reason to think that I would want to not stay there for the duration, but I am trying to build in redundancy into my plan.

I have stress tested interest rate repayment to 9% which on my current salary I can afford, I can even handle a 20% drop in price without going into any substantial amount of negative equity.

The way the property market has gone I would imagine many people these days would encourage you to think long term (20-30years). The problem with that is that one can never plan that long term.

You never know what is around the corner.

I would have no problem buying short term (10-15years) providing I am covered. By that I mean, rental market in the same area costs more than my mortgage. If the prices fell again I could absorb the loss should I have to move and sell. If I lost the job, would I be able to cover the mortgage short term (year - two). Is my job / company I work for stable....

Am I in a long term relationship and if things move on would this place be sufficient for two of us and the baby (if possibility).

Once all these things are covered and you are happy you have all the answers then I would not see any problems with buying.

As a single person or a young couple you can never or almost never be able to afford buying 4 bed house with huge garden and so on.... That is why you start with low cost entry property and work your way up.

The biggest issue with people during the boom was, that they did not only buy considering short term, but bought in expectation to sell and make a huge profit in 2-3 years. The ones that did not, they re-mortgaged their houses to get better cars or holidays.....

Ones that bought to simply live in it are probably the ones that are still paying their mortgage even with some difficulties.

StillWaters

There is absolutely nothing wrong with a property ladder. I think some people in Ireland misuse the word. The ladder is not a wealth making tool, and when one steps up to the next life stage/property, one sells the existing house/flat. Not keeps it as a BTL. That wasn't a property ladder operating. That was a ponzi scheme.

There is also no point looking back nostalgically and saying my pArents bought to live in til death etc. The property and labour markets were very very different then.

A good property Market has a good range of housing types for all life stages and all family types. We started that in the 90s with the original tax breaks to build apartments in inner city Dublin. Then the rotten governance and criminal lack of oversight began.

Scortho

El_Dangeroso wrote: »

Thanks for your thoughts, unfortunately I'm neither young nor single!

I'm pretty settled in my life and really wouldn't envision that changing in the medium to long term. So in that regard the apartment would have enough space.

I think myself now I'm thinking I may want to change in around 7 years.

Is there a potential for you to have kids. If yes, keep this in mind. If not well then an apartment would be totally adequate.

And the wanting to change part, that's natural. If your circumstances allow you too then fire away. But when you buy you can't just assume sure ill live here for a few years. You have to be happy with the fact that this could potentially be my home for the rest of my life.

Apologies I thought you were like myself in your early 20s!:)