Would you wait to buy a home/apartment in Dublin?

Millicent

I mentioned in another thread that I and my partner are saving for a deposit to buy in Dublin. For a few reasons (work, my partner's child, proximity to family), we would need to be in Dublin to have any sort of quality of life.

Our rent is currently €1,300 a month, an amount which we would like to put towards an asset that we would own for retirement, and if we owned our own home in Dublin, a lot of our other costs would come down (commuting costs in particular).

But we've been watching the market for 18 months now and seeing how the prices are rising while supply (especially in our price range) is stagnating.

It's making me question the logic of trying to buy right now instead of riding it out another few years to see where the market is then. Without some major market intervention, I don't see supply increasing all that much in the near future or of prices settling to a stable level.

We're both in our early thirties so don't want to wait too long to buy as that will have an effect on the cost of our mortgage repayments but at the same time, I don't want to drastically pay over the odds for an asset that will, in the medium term, depreciate in value.

I know the wisdom (and it is sensible) is that you should buy somewhere you plan to stay long-term and I agree with that, but at the same time, I don't want to be in the position where I'm stuck where I am should an unexpected life change happen either.

So I'm looking for some opinions that might help me make up my mind on this: Would you buy a home/apartment in Dublin right now in light or where the market is at the moment?

SteM

€1300 per month, that's more than our mortgage and we bought during the last boom!

People concern themselves too much with property depreciation imo. Cars depreciate and their value rarely rises. House prices rise and fall over time and if you're in a house that you're happy with, that can grow with you and you can afford the mortgage repayment on then let the market rise and fall. Negative equity only really effects people looking to sell during the life of the loan. Even if you're in negative equity when the mortgage is paid off in 25 or 30 years time it's not a big deal. You will have had a use of the property and own it outright, you can choose to keep and wait for the market to rise or sell it and buy a place somewhere sunny when you retire.

Obviously all of the above relies on your circumstances remaining the same or not changing to a drastic point where you can't repay your mortgage. If you're buying the house as a short term investment you need to worry about changes in house prices too but that's the same with any market investment.

You could hold off for a few years and hope for a market downturn but downturns in property prices normally coincide with general economic downturns. Will you be able to get a mortgage in those circumstances? Prices crashed relatively recently but the banks weren't lending so people couldn't take advantage unless they were cash buyers.

Theboinkmaster

Since the current situation is being caused by short supply I don't see prices declining anytime soon.

If you can afford it buy now, don't wait for some magical price deflation as I doubt it will happen - the best you can hope for is prices stop going up IMO.

Obviously only buy what you can afford, that you'd be happy living in for 20+ years and location is good etc.

jamesthepeach

People have been saying the same thing op for a few years now. Look how they got on.
A lot of people were also saying the same from 2000 to 2007.
Most of those people are more than half way through their mortgage now.
My Dad always said buy a house the minute you can get the mortgage. I think that was good advice and would have been good if given enough at any time, even in 2007.

mel123

If lets say this bubble/cycle lasts say 5 years, and you want to see if prices go to say levels of 2011/12, thats another 78k roughly you are going to pay out on rent assuming rents stay more or less the same as what you are spending now.
Its a no brainer what to do IMO AS LONG as you are prepared to stay in the house if it does fall in to negative equity, that would be my main point. During the boom friends of mine got stuck in places they still hate to this very day and are still not out of negative equity!! You mentioned you have a partner and step child, as long as a house ticks all the boxes for you all, id say go for it.

Feckofff

Interest rates are key, when will they go up?
Put 2% on the ECB and everything looks very different.
Mortgage are cheap because ECB =~0%

Also there are a lot of hidden costs to own your own home. E.g. house insurance, maintenance charge, property tax, = 2k/pa
Decorating to a good standard needs min 2k/pa
Assuming that you don't buy a forever home, that's another 1k/pa in stamp and fees assuming you stay 5-6 years

So that's 5k/pa you don't have to pay as a renter.

If you have a good relationships with your current landlord, I would ask if he would do a multi-year contract.

Just my 2c

SteM

Feckofff wrote: »

Interest rates are key, when will they go up?
Put 2% on the ECB and everything looks very different.
Mortgage are cheap because ECB =~0%

Also there are a lot of hidden costs to own your own home. E.g. house insurance, maintenance charge, property tax, = 2k/pa
Decorating to a good standard needs min 2k/pa
Assuming that you don't buy a forever home, that's another 1k/pa in stamp and fees assuming you stay 5-6 years

So that's 5k/pa you don't have to pay as a renter.

If you have a good relationships with your current landlord, I would ask if he would do a multi-year contract.

Just my 2c

House insurance and property tax should come at well under 2k pa unless you're buying at the top of the range. A house in band 7 is €675 pa. I'm not sure what you're calling a maintenance charge? Only private estates have them don't they? So that's not going to be an issue for a lot of buyers.

2k pa on decorating? No way unless you're hiring a painter every year.

You're 5k pa guesstimate is very high imo.

Feckofff

SteM wrote: »

House insurance and property tax should come at well under 2k pa unless you're buying at the top of the range. A house in band 7 is €675 pa. I'm not sure what you're calling a maintenance charge? Only private estates have them don't they? So that's not going to be an issue for a lot of buyers.

2k pa on decorating? No way unless you're hiring a painter every year.

You're 5k pa guesstimate is very high imo.

2k included the maintenance charge which is very common on new builds.
1k for apartment or say 500 for house

For the decoration I'm including everything inside the house i.e. upgrading appliance, replacing flooring, furniture etc none of these things last forever.

SteM

Feckofff wrote: »

2k included the maintenance charge which is very common on new builds.
1k for apartment or say 500 for house

For the decoration I'm including everything inside the house i.e. upgrading appliance, replacing flooring, furniture etc none of these things last forever.

Maintenance charge is avoidable by not buying in a new build. You put down 2k PA for decorating. You're not going to replace flooring that often, appliances last a long time if you look after them. It doesn't have to be close to 2k PA if you don't want to it to. I really think you're way on the high side with your original 5k pa costing. Just going by what it costs to run our 3 bed mid terrace.

PhoenixParker

SteM wrote: »

Maintenance charge is avoidable by not buying in a new build. You put down 2k PA for decorating. You're not going to replace flooring that often, appliances last a long time if you look after them. It doesn't have to be close to 2k PA if you don't want to it to. I really think you're way on the high side with your original 5k pa costing. Just going by what it costs to run our 3 bed mid terrace.

2k pa is on the low side for interior decor. You won't spend it every year but then you'll have years where you spend multiples. People underestimate it. A new kitchen at €10k once every 20 years is €500 a year and that's without touching any other room in the house.

Feckofff

SteM wrote: »

Maintenance charge is avoidable by not buying in a new build. You put down 2k PA for decorating. You're not going to replace flooring that often, appliances last a long time if you look after them. It doesn't have to be close to 2k PA if you don't want to it to. I really think you're way on the high side with your original 5k pa costing. Just going by what it costs to run our 3 bed mid terrace.

If you don't buy a new build you would have to give up the 20k free money grant.

So what do you think it costs to decorate/ maintain a small second hand house?
Could you do it for 1k/pa?

If so it's still 4k/pa of costs that people tend to gloss over.

Anyway, it's only my point of view, people should do their own sums and see what makes sense.

sunrainmooncl

SteM wrote: »

€1300 per month, that's more than our mortgage and we bought during the last boom!

Must not be in dublin?

Chilli Con Kearney

Will the potential mortgage be more than €1300 per month? Much more? If so, why not sit tight on your manageable (and controlled) rent for another year or two and keep saving. Put yourself in a better place with saving and then move when (you feel that) things are more favourable to you.

We are all told to buy our houses when we have a deposit racked up. Better to be paying off a (sometimes) more expensive than paying rent to somebody else. But if it makes financial sense to keep renting and you are happy to do so then keep going.

Like you, we are in a similar situation but it's just so hard to justify the crazy prices that are around at the moment. Don't get too caught up with it. Keep putting your money away and put yourself in the best position you can but don't too hung up on owning, prices, etc. It can upset you if you let it.

jamesthepeach

I remember a mate of mine bought one of the 3 storey houses in Rathmines back I'm the early 90s.
We were all telling him he was mad to pay £120k for a house in Rathmines. That was outrageous.
I think that same house is probably worth somewhere between €1.5m and €2.5m
I'm not nosey enough to look it up, but I wish I and bought it.

People always think current prices are outrageous. They were right once. But all other periods it has worked out ok. Even worked out ok since the crash looking back from today.
But there is certainly a huge fear factor in spending so much money, and rightly so.