South Dublin housing market: Mini bubble or start of upturn? Buy now or wait?

sconry

Buy now while you can or wait for mini bubble to subside? In South Dublin particularly, house prices are up a good 20% with most houses generating bidding wars and selling significantly above asking. Is this just a mini bubble to avoid or should we buy now while we can still afford to?

Little Miss Cutie

I don't think anyone really knows the answer to this question.

We are buying now, as it is the right time for us. We can afford our repayments and would like to start a family.

It is a very personal decision in my opinion.

The_Morrigan

keith16 wrote: »

I don't care.

Then don't post!

newport2

sconry wrote: »

Buy now while you can or wait for mini bubble to subside? In South Dublin particularly, house prices are up a good 20% with most houses generating bidding wars and selling significantly above asking. Is this just a mini bubble to avoid or should we buy now while we can still afford to?

It's definitely partly down to the fact that so many people cannot sell and move, whether they want to or not due to negative equity, banks not lending, etc, so there's definitely an artificial element to it.

Like LMC says above, it's down to each personal situation. Nobody has an answer. The worrying thing though is that interest rates are at their lowest they have ever been now. People need to factor in that their mortgage payments will considerably rise in the years ahead.

Eric Cartman

most properties being sold in south dublin are investment or BTL properties bought by cash buyers, most areas of south dublin are a safe bet, will always be worth substantial money and very easy to let out all year round. people are just going with the safest bet that they can. Its impossible to say whether at a certain price ceiling that investors will turn their backs and the prices will settle or whether its just going to keep rolling as a massive bubble till it pops again.

athtrasna

My sister bought in Ballinteer two years ago and houses on their road have sold for between 120-150k more than they paid in the past few months.

They've been rising steadily over that time, with no additional supply on the horizon, there's only one way I see it going

ted1

athtrasna wrote: »

My sister bought in Ballinteer two years ago and houses on their road have sold for between 120-150k more than they paid in the past few months.

They've been rising steadily over that time, with no additional supply on the horizon, there's only one way I see it going

I bought in may 2012 and the price has more than doubled ( means nothing as its a family home and we've no intention in selling) . I'd say its safe to say that we are are close enough to the top and that prices should hold steady enough.

Best advice is to buy a house when you see one that you can see your self living in for the next ten years and that you can afford.

NZ_2014

The whole thing is a bit of a joke.

I mean, you`ve got the people who bought in 2005-2007, for ridiculous prices.

Then you`ve got the lucky ducks who bought similar or the same houses for half price or less in 2011/2012, or for prices much less than it would cost to actually build the house etc.

Now prices are gone up 20,30 or 40% in some places/houses over the last one or two years.

What a mess. Wheres the fairness in the world, wha!?

ted1

NZ_2014 wrote: »

The whole thing is a bit of a joke.

I mean, you`ve got the people who bought in 2005-2007, for ridiculous prices.

Then you`ve got the lucky ducks who bought similar or the same houses for half price or less in 2011/2012, or for prices much less than it would cost to actually build the house etc.

Now prices are gone up 20,30 or 40% in some places/houses over the last one or two years.

What a mess. Wheres the fairness in the world, wha!?

The ones who bought in 2005-2007 got trackers, so even though they paid a higher price their repayments are the same as those who bought in2011-2012, there's your fairness.

NZ_2014

ted1 wrote: »

The ones who bought in 2005-2007 got trackers, so even though they paid a higher price their repayments are the same as those who bought in2011-2012, there's your fairness.

So your telling me Person A buys a house for €x, Person B buys a house for €x/2 (Half the price) a few years later; because Person A got a tracker mortgage the payments are about the same? (assuming similar deposits etc)

whatnext

NZ_2014 wrote: »

So your telling me Person A buys a house for €x, Person B buys a house for €x/2 (Half the price) a few years later; because Person A got a tracker mortgage the payments are about the same?

Not far off, factor in TRS on the mortgage interest any you are nearly there.

NZ_2014

whatnext wrote: »

Not far off, factor in TRS on the mortgage interest any you are nearly there.

Thats madness, hard to believe, Ill take your word for it (No I won`t, Ill examine the figures.)

What next!?

whatnext

NZ_2014 wrote: »

Thats madness, hard to believe, Ill take your word for it (No I won`t, Ill examine the figures.)

What next!?

335k tracker from 07 - 30 year term - repayments 1096
200k variable today - 23 year term - repayments 1186 (to give roughly the same finish date
200k variable today, - 30 year term - repayments 954

All based on based on 50k deposit

I know it's not half, but it's accurate for where I live

dubrov

NZ_2014 wrote: »

Thats madness, hard to believe, Ill take your word for it (No I won`t, Ill examine the figures.)

What next!?

The comparison is a 385k house vs 250k so only 35% drop which is a lot lower than most places from 2007 to 2011/12. Even at that, the 2007 30Yr mortgage is 15% more expensive.

The tracker purchaser needs to go the full term of the mortgage to get full value. The variable rate vs tracker spread is also at all time highs and is unlikely to remain as high for the full term of the loan.

ted1

dubrov wrote: »

The comparison is a 385k house vs 250k so only 35% drop which is a lot lower than most places from 2007 to 2011/12. Even at that, the 2007 30Yr mortgage is 15% more expensive.

The tracker purchaser needs to go the full term of the mortgage to get full value. The variable rate vs tracker spread is also at all time highs and is unlikely to remain as high for the full term of the loan.

Fixed will be higher again and there was TRS for buyers in 2007 and interest rates will raise further while trackers remain low. So as rates raise those with new mortgages will face even higher repayments.

Bigcheeze

ted1 wrote: »

Fixed will be higher again and there was TRS for buyers in 2007 and interest rates will raise further while trackers remain low. So as rates raise those with new mortgages will face even higher repayments.

There was also up to 9% stamp duty vs 1% now.

ted1

Bigcheeze wrote: »

There was also up to 9% stamp duty vs 1% now.

True, but those renting and riding out the madness prices of the Celtic tiger had rent to pay. So they may cancel each other out.

dubrov

ted1 wrote: »

Fixed will be higher again and there was TRS for buyers in 2007 and interest rates will raise further while trackers remain low. So as rates raise those with new mortgages will face even higher repayments.

If rates rise, trackers and variable rates will increase.

Given the tracker would have a much bigger loan, this would probably mean the 2007 mortgage does much worse.
E.g. a 1% increase on a 335,000 mortgage will cost 3,350 extra while it would only cost an extra 2,000 on a 200,000 mortgage

MouseTail

dubrov wrote: »

If rates rise, trackers and variable rates will increase.

Given the tracker would have a much bigger loan, this would probably mean the 2007 mortgage does much worse.
E.g. a 1% increase on a 335,000 mortgage will cost 3,350 extra while it would only cost an extra 2,000 on a 200,000 mortgage

If ECB rates rise 1%, a +1 tracker rises 1%, an SVR could rise 2%. Also, the capital will have been paid down now on the old mortgage, so its 1% on the outstanding balance, not the original mortgage.

New houses were exempt from stamp duty, there was even a FTB grant at one stage.

dubrov

MouseTail wrote: »

If ECB rates rise 1%, a +1 tracker rises 1%, an SVR could rise 2%. Also, the capital will have been paid down now on the old mortgage, so its 1% on the outstanding balance, not the original mortgage.

New houses were exempt from stamp duty, there was even a FTB grant at one stage.

If ECB rates rise 1%, a variable rate could rise 0% as well.

The spread between variable and ECB rate is very high at the moment. Barring another banking collapse, I'd expect this to tighten over the next few years.

You need to compare a 30 year mortgage now against a 30 year mortgage in 2007. A mortgage will look much better when compared against renting (historically anyway),

The outstanding amount would be much higher on the 2007 mortgage so higher interest rates mean relatively more interest

MouseTail

dubrov wrote: »

If ECB rates rise 1%, a variable rate could rise 0% as well.

Sorry, but that's fairytale economics.

dubrov

MouseTail wrote: »

Sorry, but that's fairytale economics.

Care to say why?

Maybe have a look at the spread between tracker and variable rates since the Euro began.

Right now Banks can hike up variable rates as there is so much negative equity out there. People can't move to another bank.

In a normal market, variable rates are restricted by competition.

OMD

dubrov wrote: »

Care to say why?

Maybe have a look at the spread between tracker and variable rates since the Euro began.

Right now Banks can hike up variable rates as there is so much negative equity out there. People can't move to another bank.

In a normal market, variable rates are restricted by competition.

What point are you trying to make Dubrov? It is not clear from your posts. Yes trackers may rise faster than variable rates but trackers will always be lower than variable. So I am not really sure of the relevance of your posts. In addition if you took out a tracker in 2007 you have already had 7 years of low interest rates and are looking forward to at least another 3 years of extremely low rates.

woodseb

MouseTail wrote: »

Sorry, but that's fairytale economics.

it's not, ECB rising rates by 1% will only happen in an economic upturn. At the moment the spread between ECB base rates and SVRs are ~4%, it's maybe not the most likely outcome, but certainly possible and definitely not fairytale -especially if new lenders re-enter the Irish market and competition increases

Heisenberg1

ted1 wrote: »

I bought in may 2012 and the price has more than doubled ( means nothing as its a family home and we've no intention in selling) . I'd say its safe to say that we are are close enough to the top and that prices should hold steady enough.

Best advice is to buy a house when you see one that you can see your self living in for the next ten years and that you can afford.

We bought in June 2012 like you my house has more than doubled in price. Have you been tempted to sell ? As others have said OP if you can afford it and are happy then buy now if not then wait.

ted1

Heisenberg1 wrote: »

We bought in June 2012 like you my house has more than doubled in price. Have you been tempted to sell ? As others have said OP if you can afford it and are happy then buy now if not then wait.

Very very tempted. Would love to build my own home, but I love the area I'm in and the kids are well settled and my misses can be scary.

Heisenberg1

ted1 wrote: »

Very very tempted. Would love to build my own home, but I love the area I'm in and the kids are well settled and my misses can be scary.

Same hear the wife wants to move but the area is fantastic and the kids are settled. Would love to build my own home but it's all a pipe dream at the moment although you never know.

lima

Sometimes if you do the math it works out cheaper to rent than buy. All depends on your circumstances, kids etc. Certainly cheaper for me right now.

For me, the stress alone of not having to worry about house prices/interest rates etc. is more than enough.

The Spider

lima wrote: »

Sometimes if you do the math it works out cheaper to rent than buy. All depends on your circumstances, kids etc. Certainly cheaper for me right now.

For me, the stress alone of not having to worry about house prices/interest rates etc. is more than enough.

Yeah right, anyway I decided to tot up how much rent I've paid over the years, try it sometime and you'll see how much money you've thrown away.

So I rented from 1995-2010 fifteen years, over that time I stayed in accommodation all over Dublin 10 years sharing with people from strangers, exes and family, 5 years on my own, plus a couple of months where someone moved out and I had to cover the rent. There was only one stand out place in all of it in my opinion, and that was a shared redbrick on the coast.

So the grand total I spent over the years, not adjusted for inflation so it's probably more is:

113738 euros.

Quite a lot well over the hundred grand mark for shared accommodation in flats apartments and substandard houses in Dublin what did I have at the end of it?

Nothing, so there's your argument for buying, anyone renting I recommend you do the same it's a bit of an eye opener.

jay0109

How much interest would you have paid on a mortgage over those 15 years>

The Spider

jay0109 wrote: »

How much interest would you have paid on a mortgage over those 15 years>

Not that I was in a position to, but if I had bought in 1995, it would have been well paid off, seeing as houses in Ranelagh around then were going for about 80 grand, punts.

In 1995 I earned 10 grand a year and that was considered good money then, so 80 grand seemed like an absolute fortune.

ted1

jay0109 wrote: »

How much interest would you have paid on a mortgage over those 15 years>

On a 20 year mortgage he'd be fairly close to having an asset at the end and in 5 years would be living rent/ mortgage free.


Lima, with a family I'm far less stressed having my own place. No fears about a land lord evicting us, upping the rent etc.
Being able to paint rooms and make changes as I see fit.

lima

Ted I agree it's certainly better having your own home and putting down roots when you have kids. Choosing to have no kids (as of right now) does allow more flexibility in accommodation choices.

Spider,

It's certainly a lot of money to pay in rent. One would pay an enormous amount in interest over 15 years too. Plus whether you lived in your own house or in rented houses over the last 15 years doesn't make a different in the here and now, all you have is memories.

Mortgage = Interest + principle. Interest is 'dead' money, principle is like saving and using that saving to buy a house interest free after 20-35 years.

Rent plus saving = Rent + savings. Rent is 'dead' money, saving is like paying principle and keeping that principle in other investment products etc.

I have been renting 9 years so far in my life, in different parts of the world. Say an average of e600 per month = e64,000. Meanwhile my friends are stuck miserably in shoeboxes worth nothing in the 'burbs. I have also saved six figures in savings so same as 64k in 'interest' and 1xxk in 'principle'. Lived in some great places and made friends for life. Currently rent a redbrick 20min walk to work in D4/D6 area. Never needed to care about stuff going wrong in house or cutting the grass (actually I have no idea of problems that can go wrong with houses!) just got the landlord to fix it.

Everyone is different and clearly you made the right choice for you, my point is that just because someone bought a house doesn't mean its right for everyone.

Idbatterim

if it is current market rent v buying now, put it this way, people are hoping or speculating there might be another bust, say prices rise on average 10% a year for another 5 years, BIG IF prices implode 50% again, so you they are back to where they are now and you have shelved all that money out on rent, thats a given. Being gun ho cost a lot of people a lot of money, so has been far too cautious a 18-24 months ago when prices were LOL cheap compared to now, I certainly would have bought then if I was in a position to, I still am not in a position to now, which is probably a good thing as there is no tough decision for me now, its all academic... I cant see how interest rates will get cheaper than they are now and if trackers ever surface again, there will be a lot more margin built into them!

Dredd_J

You can just keep renting, which you are used to already, and wait and maybe buy if house prices fall in the future.
If they dont fall then you just remain as you are with renting. Its not really that bad to rent. Well at least not until retirement anyway.