250k Deposit - Buy or rent?

EvolvedApe

I have saved up a decent deposit.
I am currently renting. My question is should I continue to rent or just buy a place. I do have an inkling that property prices will drop considerably but I am not sure when. I am reluctant to push all saving into a housing market that could drop.
I am single and dont want to house share so renting it expensive.
I am Dublin and if I do buy would probably buy around 400-450k

limnam

If you can find somewhere you want to live and can afford it, just buy it.

Sleeper12

There's no solid reason why houses will fall in price with the exception of outside forces. Prices aren't artificially high. There is a shortage of houses & there will be for at least another 4 or 5 years. Factor in the high rent you will be paying for the next few years

EvolvedApe

limnam wrote: »

If you can find somewhere you want to live and can afford it, just buy it.

Thats what I was thinking, just not pushed on owning property but feel I have no choice.

Glass fused light

EvolvedApe wrote: »

I have saved up a decent deposit.
I am currently renting. My question is should I continue to rent or just buy a place. I do have an inkling that property prices will drop considerably but I am not sure when. I am reluctant to push all saving into a housing market that could drop.
I am single and dont want to house share so renting it expensive.
I am Dublin and if I do buy would probably buy around 400-450k

Are you investing in a short term investment or planning long term?

Buying someting you can grow into and doing a rent a room for a few year is an option.
You gain from the house share and can organise the space to your needs and wants eg converting one of the bedrooms into a personal sitting room etc

EvolvedApe

Sleeper12 wrote: »

There's no solid reason why houses will fall in price with the exception of outside forces. Prices aren't artificially high. There is a shortage of houses & there will be for at least another 4 or 5 years. Factor in the high rent you will be paying for the next few years

Houses are artificially high imo. Supply is deliberately kept low.

Sleeper12

EvolvedApe wrote:

Houses are artificially high imo. Supply is deliberately kept low.

I don't believe supply is deliberately kept low but even if it is how do you expect prices to come down with supply being kept deliberately low.

We need we need 100,000 homes today & 30,000 new units per. This year we might produce 20,000. This means that we fall behind another 10,000 units. It's going to be a few years before prices start to level out.

A lot of young people are expecting a bubble to burst because we had a bubble 12 years ago. Don't be fooled. It's the only ever property crash in the history of the state. They don't come along too often going on past history.

limnam

EvolvedApe wrote: »

Houses are artificially high imo. Supply is deliberately kept low.

We were building over 90k houses a year when it was costing over 400k for a 3 bed semi in ongar 12 years ago.



There's always going to be something. As I said, find something you want to live in and can afford and buy it OR continue to rent. It's not like there's so many different options to choose from.

Jimbobjoeyman

You need to factor value vs price when examining the housing market in Ireland.
Price is what you pay for something and value is what it is worth.

Currently we are in a situation where house prices are high due to low supply and high demand.
There is no way some of these houses command the money they currently are in a properly functioning market and in my opinion this means they are over priced.

Your going to see in a number of years as housing supply increases to meet demand, average prices will fall and you will no longer be able to get the price you paid for the house in the open market under those conditions, thus putting you into negative equity.

Add to that the fact that when supply increases so will market transactions and such the demand for money will increase which will see a rise in interest rates.
This will increase the monthly repayment on the average variable rate pushing someone in negative equity into an even worse position financially.

Now if you are in a position where you feel as though the money you are currently paying each month in rent for the next four or five years will be equal or more than any drop you can expect in house prices then by all means buy if it is worth it to you.

But look before you leap.

EvolvedApe

Jimbobjoeyman wrote: »

You need to factor value vs price when examining the housing market in Ireland.
Price is what you pay for something and value is what it is worth.

Currently we are in a situation where house prices are high due to low supply and high demand.
There is no way some of these houses command the money they currently are in a properly functioning market and in my opinion this means they are over priced.

Your going to see in a number of years as housing supply increases to meet demand, average prices will fall and you will no longer be able to get the price you paid for the house in the open market under those conditions, thus putting you into negative equity.

Add to that the fact that when supply increases so will market transactions and such the demand for money will increase which will see a rise in interest rates.
This will increase the monthly repayment on the average variable rate pushing someone in negative equity into an even worse position financially.

Now if you are in a position where you feel as though the money you are currently paying each month in rent for the next four or five years will be equal or more than any drop you can expect in house prices then by all means buy if it is worth it to you.

But look before you leap.

Yes this is all along the lines of my thinking.
But hasnt helped me make up my mind.

Jimbobjoeyman

EvolvedApe wrote: »

Yes this is all along the lines of my thinking.
But hasnt helped me make up my mind.

It's fairly basic undergrad supply and demand economics.
The way I see it you going to get ****ed either way so you may as well get comfortable where you are for the time being.

Personally I see it if your rental outlay at the moment is somewhat reasonable considering the market conditions, buying may not be the best option.

Eric Cartman

you also have to remember that at the moment 400k won't get you something you want, housing is slim pickings at present so rather than end up in a new estate in the middle of nowhere or a run down outskirts of Dublin offering, bide your time and when supply increases you'll have more options.

Samuel T. Cogley

Eric Cartman wrote: »

you also have to remember that at the moment 400k won't get you something you want, housing is slim pickings at present so rather than end up in a new estate in the middle of nowhere or a run down outskirts of Dublin offering, bide your time and when supply increases you'll have more options.

Well done OP for saving 250K, however 400K is never going to put the OP in a desirable City Centre location or a location in SoCo Dublin that isn't a pain in the arse commute; depending on where he works of course.

There are available properties in Drumcondra, Glasnevin, Kilester and Raheny that could a reasonable investment and convenient home.

tuskacz

Golden rule of the economy: buy at the bottom, sell at the peak. Now it is bad time for buying. 

Rent now and buy while crash comes. And it will, no economy prosperity lasts forever.

Fol20

tuskacz wrote: »

Golden rule of the economy: buy at the bottom, sell at the peak. Now it is bad time for buying. 

Rent now and buy while crash comes. And it will, no economy prosperity lasts forever.

What your saying is right however it’s all about know when it’s going to come.it might come next year or it might come in 10 years. If it happens soon. He just saved himself a ton of money. If it comes in 10years, you could have put more equity in to your home. Have security of tenure and maybe balance out. All I will say is if it feels right for you, you have a decent deposit so I would go ahead with it

Sleeper12

tuskacz wrote:

Golden rule of the economy: buy at the bottom, sell at the peak. Now it is bad time for buying.

That's nonsense really. If it were that simple we'd all millionaires.

The best time to trade up was to sell in 2007 and rent for 2 or 3 years. You could have bought a house twice as big as your old one & still had money left over. I'm betting that not more than 5 or 10 families did this in practice & the ones that did didnt plan it that way.

Bottom line is no one knows how high prices will go or when /if they decrease in price. You can expect another 30 percent increase in the next 3 years or so. If they come down in 5 or 6 years its unlikely that they will come down to todays prices but even if they did you'd have paid high rent for the 5 orders 6 years.

No financial, government, EU or banking officials believe that there is an decrease in sight.

If someone has the finance to buy the home that they want now then it only makes sense to buy it now. Your home isn't bought as an investment. Even if you pay 5 percent more now than you actually had to the house will be worth a lot more in 5, 10 and 20 years. Even poor unfortunates that got caught out in 2007 at the height of the madness they're homes will be worth a lot more in 2027 than they paid in 2007.

In the long term property will always increase

LuckyLloyd

If you have 250k in available savings, you should be exploring a range of investment options.

blackwhite

Jimbobjoeyman wrote: »

You need to factor value vs price when examining the housing market in Ireland.
Price is what you pay for something and value is what it is worth.

Currently we are in a situation where house prices are high due to low supply and high demand.
There is no way some of these houses command the money they currently are in a properly functioning market and in my opinion this means they are over priced.

Your going to see in a number of years as housing supply increases to meet demand, average prices will fall and you will no longer be able to get the price you paid for the house in the open market under those conditions, thus putting you into negative equity.

Add to that the fact that when supply increases so will market transactions and such the demand for money will increase which will see a rise in interest rates.
This will increase the monthly repayment on the average variable rate pushing someone in negative equity into an even worse position financially.

Now if you are in a position where you feel as though the money you are currently paying each month in rent for the next four or five years will be equal or more than any drop you can expect in house prices then by all means buy if it is worth it to you.

But look before you leap.

If the OP is talking about a €250k deposit on a house priced at €500k then it's highly unlikely that they'd fall into negative equity.
If/when average prices fall they'd likely take a loss if trying to sell the house, but prices would need to drop by more than 50% to push them into negative equity.

o1s1n

If you're capable of saving 250k then why not continue to save as you are and wait and see how the market goes?

I don't know what you're saving per year, but imagine you managed to get up to 400k in 4-5 years and then there was some upheaval in the market causing prices to plummet?

You could jump in with cash and potentially buy something lovely with no mortgage.

LuckyLloyd

There's definitely certain circumstances where buying is a prudent option, and certain circumstances where liquidity, flexibility and diversity is a better approach.

awec

tuskacz wrote: »

Golden rule of the economy: buy at the bottom, sell at the peak. Now it is bad time for buying.

Rent now and buy while crash comes. And it will, no economy prosperity lasts forever.

1. Nobody knows when the bottom is
2. Nobody knows when the peak is

Are we at the peak right now? Nobody knows. Will prices continue to rise for another 10 years? Nobody knows. Will they drop in 5 years? Nobody knows. If a drop comes, what will it look like? Nobody knows.

If you're buying a home, rather than an investment, then IMO the two questions to ask yourself are:

1. Can you afford the mortgage even if interest rates rise by a number of percentage points
2. Is the property somewhere you want to live long term

RoboRat

Looking at daft, average price for renting a one bed apartment is around 1400 - 1600.

If you were to buy a 3 or 4 bed and rent the rooms out and providing the location is good, you could be pulling in around 600 per room per month.
Cost for a 250k mortgage is approx 1200 p/m so you could actually end up making money if you box clever and rent out rooms.

There may be another crash but one thing is for sure, due to building restrictions, there is very limited space in Dublin for houses and even if there was a crash, I have a feeling the houses would regain their cost in a few years.

Jimbobjoeyman

Sleeper12 wrote: »

That's nonsense really. If it were that simple we'd all millionaires.

The best time to trade up was to sell in 2007 and rent for 2 or 3 years. You could have bought a house twice as big as your old one & still had money left over. I'm betting that not more than 5 or 10 families did this in practice & the ones that did didnt plan it that way.

Bottom line is no one knows how high prices will go or when /if they decrease in price. You can expect another 30 percent increase in the next 3 years or so. If they come down in 5 or 6 years its unlikely that they will come down to todays prices but even if they did you'd have paid high rent for the 5 orders 6 years.

No financial, government, EU or banking officials believe that there is an decrease in sight.

If someone has the finance to buy the home that they want now then it only makes sense to buy it now. Your home isn't bought as an investment. Even if you pay 5 percent more now than you actually had to the house will be worth a lot more in 5, 10 and 20 years. Even poor unfortunates that got caught out in 2007 at the height of the madness they're homes will be worth a lot more in 2027 than they paid in 2007.

In the long term property will always increase

your forgetting about inflation in this instance.
In a twenty year period yes the home prices will inevitably increase and those that bought in the worst possible time in 2007 will in a simple term have a home that is worth more but when adjusted for inflation that may not be the case.

Take the twenty year period of 1997-2017 for example seems its a reasonable horizon, according to the CSO inflation was 47%
in this instance your only gaining in real terms when your home appreciates by more than 47%.
Anything less you've lost money to inflation anything more you've gained in real terms.

While the ECB shoots for 2% inflation per year, given the current climate of an uncertain brexit and the continuing need for quantitative easing in many economies I don't see there being as much inflation as the previous two decades.
But who knows for sure

What will happen for sure is supply will eventually catch upto demand and at that point prices will drop below the point they are at today even if you must adjust for inflation if it is down the line.

There wont be a crash in the market as the prices are fundamentally sound but once new units eventually appear on the market(down the line) it will return to functioning properly, or at a somewhere near to a equilibrium

Cyrus

EvolvedApe wrote: »

I have saved up a decent deposit.
I am currently renting. My question is should I continue to rent or just buy a place. I do have an inkling that property prices will drop considerably but I am not sure when. I am reluctant to push all saving into a housing market that could drop.
I am single and dont want to house share so renting it expensive.
I am Dublin and if I do buy would probably buy around 400-450k

Few things

If you believe prices will fall and don't need to buy a house then don't , wait it out and see what happens worst case you are wrong and it costs a bit more when you do buy, you have a big deposit

If you do buy future proof yourself I.e. try buy a 3 or 4 bedroom place and spend a bit more rather than spend less but need to move again in 10 years

Also did you save the 250 or inherit it ? If you saved it what's your annual savings because if you are saving a lot it may make sense to invest what you have and continue to save to see if you can outperform property if you are bearish on it .

Sleeper12

Jimbobjoeyman wrote: »

your forgetting about inflation in this instance.
In a twenty year period yes the home prices will inevitably increase and those that bought in the worst possible time in 2007 will in a simple term have a home that is worth more but when adjusted for inflation that may not be the case.

Take the twenty year period of 1997-2017 for example seems its a reasonable horizon, according to the CSO inflation was 47%
in this instance your only gaining in real terms when your home appreciates by more than 47%.
Anything less you've lost money to inflation anything more you've gained in real terms.

While the ECB shoots for 2% inflation per year, given the current climate of an uncertain brexit and the continuing need for quantitative easing in many economies I don't see there being as much inflation as the previous two decades.
But who knows for sure

What will happen for sure is supply will eventually catch upto demand and at that point prices will drop below the point they are at today even if you must adjust for inflation if it is down the line.

There wont be a crash in the market as the prices are fundamentally sound but once new units eventually appear on the market(down the line) it will return to functioning properly, or at a somewhere near to a equilibrium

Most people in negative equity in 2008 are now out of it & yet we'v had very little inflation in the late 10 years or so. Believe it or not the change in the CPI from April 2008 to Arpil 2018 is only 0.2%. It doesn't make sense to my that anyone that has 250,000 in cash & doesn't have their own place to live. I get it if he can continue to save at the rate he has he can get a better house in a few years.

wersal gummage

Question for those saying prices will drop when supply increases.... (I don't disagree, just a question).

Is this view in relation to all property and locations? Eg in say rathgar, ranelagh etc - where will all the new houses be built that will reduce the price of these? People buying in these areas won't be tempted to live along the m50 somewhere?

BarryD2

tuskacz wrote: »

Golden rule of the economy: buy at the bottom, sell at the peak. Now it is bad time for buying. 

Rent now and buy while crash comes. And it will, no economy prosperity lasts forever.

One of the problems for patient purchasers is that even if there is a 'crash', government policy may stave off a dramatic fall. If a lot of mortgage holders are affected, there is some safety in numbers as there will be political pressure to minimise repossessions and extra properties coming onto the market.

Samuel T. Cogley

wersal gummage wrote: »

Question for those saying prices will drop when supply increases.... (I don't disagree, just a question).

Is this view in relation to all property and locations? Eg in say rathgar, ranelagh etc - where will all the new houses be built that will reduce the price of these? People buying in these areas won't be tempted to live along the m50 somewhere?

In desirable areas we're always going to see very high prices as there will never be enough supply to satisfy demand. Literally everyone, except me as I'm an inverse snob, wants to live in D4/6 if they could.

The cost of building alone would preclude house prices dropping much in these areas.

Alan_007_

RoboRat wrote: »

Looking at daft, average price for renting a one bed apartment is around 1400 - 1600.

If you were to buy a 3 or 4 bed and rent the rooms out and providing the location is good, you could be pulling in around 600 per room per month.
Cost for a 250k mortgage is approx 1200 p/m so you could actually end up making money if you box clever and rent out rooms.

There may be another crash but one thing is for sure, due to building restrictions, there is very limited space in Dublin for houses and even if there was a crash, I have a feeling the houses would regain their cost in a few years.

With regard to renting out the rooms, he would want to be careful that he doesn't make too much from this or else he would be taxed on the entire amount.

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-a-room-relief/index.aspx

homerjay2005

Jimbobjoeyman wrote: »

Your going to see in a number of years as housing supply increases to meet demand, average prices will fall and you will no longer be able to get the price you paid for the house in the open market under those conditions, thus putting you into negative equity.

negative equity is one of the most flawed and misunderstood logics around.

if you are somebody buying a house to live in it and youve no intention of selling it, then negativity equity matters a damn.

somebody was on to me a few months ago about a house they bought 12 years ago and how they were in negative equity on it bla bla bla trying to make me feel sorry for them, despite the fact that it was their family home for the last 12 years and in 10 years time they would be completely debt free and then own an asset in Dublin, worth a considerable amount of money.

they also refused to factor in the logic that they would have forked out 140k in rent in that time and have nothing to show for it.

bilbot79

Sleeper12 wrote: »

I don't believe supply is deliberately kept low but even if it is how do you expect prices to come down with supply being kept deliberately low.

We need we need 100,000 homes today & 30,000 new units per. This year we might produce 20,000. This means that we fall behind another 10,000 units. It's going to be a few years before prices start to level out.

A lot of young people are expecting a bubble to burst because we had a bubble 12 years ago. Don't be fooled. It's the only ever property crash in the history of the state. They don't come along too often going on past history.

The Irish government created nama to have absolute control over house prices. They also prevented repossessions for the same reason.

Prices are artificially high. If they weren't the values would be half. I remember Noonan even muttering a few years ago ' there's room for prices to be just a little higher..'. he was in total control

awec

homerjay2005 wrote: »

negative equity is one of the most flawed and misunderstood logics around.

if you are somebody buying a house to live in it and youve no intention of selling it, then negativity equity matters a damn.

somebody was on to me a few months ago about a house they bought 12 years ago and how they were in negative equity on it bla bla bla trying to make me feel sorry for them, despite the fact that it was their family home for the last 12 years and in 10 years time they would be completely debt free and then own an asset in Dublin, worth a considerable amount of money.

they also refused to factor in the logic that they would have forked out 140k in rent in that time and have nothing to show for it.

Yea, the reason negative equity was such a big deal in the crash was people bought houses that they knew would only be suitable for them for the very short term.



Couples on the brink of starting a family buying two bed houses, people buying single bedroom apartments etc.

Blazedup

Tweet Morgan Kelly!

bleary

I would not be waiting around for another crash. From 1998 ,I did even though I had a substantial deposit.eventually it made no sense to buy and then I had to wait till the last few years to be in a position to do so again.
As said government will try to maintain housing market as much as possible. The only reason not to buy at the moment if paying market rents would be if you intend doing something else in the short to medium term with the money or your life. Eg change careers, move countries etc.
If maintenance doesn't appeal buy an apartment.
If you find something you like and can afford I'd recommend it.

bleary

And prices are not that expensive when you consider that they are limited by the income and deposit requirements. Compared to the time you could walk in and get multiples of up to 10 times your salary. That's hopefully not going to happen again.
Supply near city centres will not increase that much, development will be more on the edges of towns and cities. I procrastinated a few years ago then decided that 2 bed houses with gardens weren't being built in central areas anymore and just went for it.
Throughout the world Not a lot of places are available for sub 300k in urban capitals

M.Cribben

bilbot79 wrote: »

Prices are artificially high. If they weren't the values would be half.

Have you any logic or stats/reports to back that assertion up? What makes you think the real value of Irish property is half it's current price?

I could just as easily say "prices are artificially low, if they weren't prices would be double".

EvolvedApe

Cyrus wrote: »

Few things

If you believe prices will fall and don't need to buy a house then don't , wait it out and see what happens worst case you are wrong and it costs a bit more when you do buy, you have a big deposit

If you do buy future proof yourself I.e. try buy a 3 or 4 bedroom place and spend a bit more rather than spend less but need to move again in 10 years

Also did you save the 250 or inherit it ? If you saved it what's your annual savings because if you are saving a lot it may make sense to invest what you have and continue to save to see if you can outperform property if you are bearish on it .

No I didnt inherit, all savings.

I dont like the idea of a bit house though, I only need something small, 2 bed would be perfect.
Pity there are no decent houses or apartments fitting this.

EvolvedApe

EvolvedApe wrote: »

I do have an inkling that property prices will drop considerably but I am not sure when. I am reluctant to push all saving into a housing market that could drop.

Imo you're playing a mug's game here.

On a long enough timeline house prices WILL drop, there is no doubt whatsoever about that. Nobody knows what that timeline is or how much they'll rise before they do drop. If you 1) want to own your own home, 2) find a place you like and 3) can afford it then just buy it.

And there are no decent 2 bed houses or apartments available? Eh, yes there are plenty.

EvolvedApe

Emmett Delightful Numskull wrote: »

Imo you're playing a mug's game here.

On a long enough timeline house prices WILL drop, there is no doubt whatsoever about that. Nobody knows what that timeline is or how much they'll rise before they do drop. If you 1) want to own your own home, 2) find a place you like and 3) can afford it then just buy it.

And there are no decent 2 bed houses or apartments available? Eh, yes there are plenty.

What I am saying is I think prices with drop soon, obviously no one knows for sure. We are all guessing.

There are very few decent 2 bed houses and apartments, unless silly prices.

EvolvedApe

EvolvedApe wrote: »

What I am saying is I think prices with drop soon, obviously no one knows for sure. We are all guessing.

There are very few decent 2 bed houses and apartments, unless silly prices.

Well it sounds like your mind is made up anyway.