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Buy now or wait a while longer

conbob

Hi all. I'm in a position to buy a property in Dublin, I have recently received mortgage approval. It's not a large amount but enough to buy an apartment or at a stretch perhaps a house as a single buyer. With talk of stabilising property prices and mentions of a global recession is now a good time to buy? It seems like we're at a peak with lending limits in place. Although there's still a lot of unmet demand and with current rents it seems like buying could be a good move. Thanks

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jimmycrackcorm

mariaalice wrote: »

In 2012 I got turned down for a small mortgage despite having an exemplary credit record and a 40% deposit and a very secure job, We just went to another lender and got it no problems.

I know someone working in a bank on a very high salary and who had a huge deposit, got turned down by their own mortgage department recently.

Went to another bank and got their mortgage approved within two days.

[Deleted User]

pearcider wrote: »

That’s where I think you’re wrong. The macro economic environment is considerably worse now in my opinion.

In 2008, the fed discount rate was 6% going into the recession. Now it’s 2% but you need 5% cut to get an economy out of recession. In addition the fed balance sheet was less than 500 billion. Now it’s 3500 billion so less room for quantitive easing as they couldn’t unwind the balance sheet.
So on the monetary side, the US has no room to maneuver to get over a recession.

On the fiscal side things are even more grim. The US was running a very small deficit in 2007 of about 100 billion so there was a lot of room for fiscal stimulus when the banks and the massive property credit bubble collapsed. Now we are at the end of the business cycle and the US deficit is the largest in history at least 1.5 trillion.

Once this credit bubble collapses, there is no way to bail the world out. The financial crisis that faces us now is truly frightening. In 2007 the debt gdp ratio was approaching 200%. Now it is 350%. So we’ve had a “fake” recovery since Lehman brothers brought the banking system to within hours of collapse. The world traded a lot more debt for not much growth. The risks of another collapse are much greater now.

Naturally a credit collapse will lead to a property collapse since high property prices are a function of credit.

You got the drawn down value from 2012 totally wrong, are you sure all these numbers are right?

accensi0n

Nika Bolokov wrote: »

accensi0n wrote: »

I don't understand the last point in your post. Why not spend 400k to 500k on a semi D in Ballinteer considering your previous arguments?
That's basically the standard price today for a 3 bed semi D in Ballinteer.

Half a million for a small house never makes sense whatever the economic cycle. It's not New York

But the rest of your previous post was an argument FOR spending today's current prices!..

Bluefoam

Nika Bolokov wrote: »

accensi0n wrote: »

I don't understand the last point in your post. Why not spend 400k to 500k on a semi D in Ballinteer considering your previous arguments?
That's basically the standard price today for a 3 bed semi D in Ballinteer.

Half a million for a small house never makes sense whatever the economic cycle. It's not New York

Your thesis intrigues me... To back up your statement above, please give some details regarding your analysis on inflation.

Thanks.

Nika Bolokov

accensi0n wrote: »

I don't understand the last point in your post. Why not spend 400k to 500k on a semi D in Ballinteer considering your previous arguments?
That's basically the standard price today for a 3 bed semi D in Ballinteer.

Half a million for a small house never makes sense whatever the economic cycle. It's not New York

Mooooo

Haven't read all the thread so apologies if this is gone over already. But basically if buying to live in make sure it's something you can live in for 10/ 20 years, starter homes etc and other phrases are what put a lot of people in bother last time around. Paying over the odds for a small apartment and then getting caught when circumstances change. While the property market was part of the cause of the last recession and negative equity hitting people hard, the next one may not have the same massive effect on house prices but it may have an effect on incomes and employment. If buying as an investment, work off the roi of rental income and not return from capital appreciation, as in selling on cause the price may rise assuming I used that phrase correctly

jim salter

Darc19 wrote: »

The recession just gone was one of the worst in history.

It's unlikely to be repeated.

There were other recessions - mid eighties, early nineties, late nineties.

The uk is probably in a recession now.

Prices don't collapse in most recessions, but because the last recession was the worst on record and worldwide, that's what many people use as a benchmark.

A 300,000 mortgage over 25 years is under €1400/month and you can fix that rate for 7 years.

You won't rent a one bed flat for that in Dublin.

What we're facing is gonna be worse than 2008

Wesser

so in summary...... no one knows for sure!

pearcider

Darc19 wrote: »

The recession just gone was one of the worst in history.

It's unlikely to be repeated.

That’s where I think you’re wrong. The macro economic environment is considerably worse now in my opinion.

In 2008, the fed discount rate was 6% going into the recession. Now it’s 2% but you need 5% cut to get an economy out of recession. In addition the fed balance sheet was less than 500 billion. Now it’s 3500 billion so less room for quantitive easing as they couldn’t unwind the balance sheet.
So on the monetary side, the US has no room to maneuver to get over a recession.

On the fiscal side things are even more grim. The US was running a very small deficit in 2007 of about 100 billion so there was a lot of room for fiscal stimulus when the banks and the massive property credit bubble collapsed. Now we are at the end of the business cycle and the US deficit is the largest in history at least 1.5 trillion.

Once this credit bubble collapses, there is no way to bail the world out. The financial crisis that faces us now is truly frightening. In 2007 the debt gdp ratio was approaching 200%. Now it is 350%. So we’ve had a “fake” recovery since Lehman brothers brought the banking system to within hours of collapse. The world traded a lot more debt for not much growth. The risks of another collapse are much greater now.

Naturally a credit collapse will lead to a property collapse since high property prices are a function of credit.

accensi0n

Nika Bolokov wrote: »

Holding off is not without cost.

3 years rent in Dublin could be 70k if your renting a house.

Buying a property in Dublin today you need to factor that in too.

Also if the Brits cop on and Brexit is a damp squib all buyers who held off will suddenly want to buy with little stock available as builders start to cut builds.

It is impossible to time the housing market. I remember 2012 when any buyer was considered nuts and prices will continue to fall and be x% cheaper next year etc etc

If you can buy a place that you would stay in for years with a mortgage in the hundreds then if the right place is available why not.

If however you are thinking of spending 4 or 500k on a semi d in Ballinteer probably think again.

I don't understand the last point in your post. Why not spend 400k to 500k on a semi D in Ballinteer considering your previous arguments?
That's basically the standard price today for a 3 bed semi D in Ballinteer.

Nika Bolokov

Holding off is not without cost.

3 years rent in Dublin could be 70k if your renting a house.

Buying a property in Dublin today you need to factor that in too.

Also if the Brits cop on and Brexit is a damp squib all buyers who held off will suddenly want to buy with little stock available as builders start to cut builds.

It is impossible to time the housing market. I remember 2012 when any buyer was considered nuts and prices will continue to fall and be x% cheaper next year etc etc

If you can buy a place that you would stay in for years with a mortgage in the hundreds then if the right place is available why not.

If however you are thinking of spending 4 or 500k on a semi d in Ballinteer probably think again.

accensi0n

mariaalice wrote: »

The total value of new mortgage lending in 2012 was €2,636 Billion

:eek:

Darc19

The recession just gone was one of the worst in history.

It's unlikely to be repeated.

There were other recessions - mid eighties, early nineties, late nineties.

The uk is probably in a recession now.

Prices don't collapse in most recessions, but because the last recession was the worst on record and worldwide, that's what many people use as a benchmark.

A 300,000 mortgage over 25 years is under €1400/month and you can fix that rate for 7 years.

You won't rent a one bed flat for that in Dublin.

[Deleted User]

The total value of new mortgage lending in 2012 was €2,636 million, with €999 million in new lending in the fourth quarter of 2012.

https://www.bpfi.ie/wp-content/uploads/2014/08/IBF-PwC+Mortgage+Market+Profile+Q4+2012.pdf

Is it the gamblers mentality or something transferred to a property purchase they can take a punt, beat the marker ect, because they have some sort of inside knowledge.

alwald

The panic in the housing market during the last recession was unprecedented and I don't see a repeat of the same scenario as last time due to various factors. The previous recession was literally linked to the housing market and the credit associated to it, this time around, if I go by what I read in the news, it's more linked with the trade war/wall street bubble and a potential no deal brexit.

Prior to 2008 there was around 60K new units built each year so there was a huge supply...now it's barely 20K and it's selling relatively fast.

SozBbz

As someone in the process of buying (full disclosure) I think now is as good a time to buy as any.

I also bought 5 years ago and while I probably got a good price at the time, mortgage rates were around 3.6% (which I have improved on that mortgage) but now I'm looking to fix at 2.3% on this mortgage.

I'm not worried about it because i'm looking to buy what will be a forever home and IMO the fundamentals of the property itself are solid - ie location and plot. Its in SCD, near enough the Dart and nice local restaurants and other amenities, in otherwords whatever happens to the economy its a place where people will always want to live, and in my mind that will secure its value relative to other properties. Its also got a large south facing garden, where we could build a mews house (no plans for this btw but its interesting in terms of the asset value) or more likey a sizable extension to accommodate our future needs.

We can afford our repayments. They're less than what it would cost to rent a 2 bed apartment in the same area. This is because we're getting a decent rate and also we're prudent enough to have decent equity from day one.

The property itself is a one off and we love it - I think its the type of place that could have sparked a bit of a bidding war if the market were more buoyant.

All in all, we're happy to go ahead.

[Deleted User]

pearcider wrote: »

You could get a loan in 2012 if you had a secure job and a good deposit and a credit history. There was 6 billion euro drawn down in 2012 with the average FTB mortgage of 153,000. Average FTB mortgage last year was 220,000. Let that sink in.

If you can’t rely on a job and savings in the bad times why would you want to overpay in the good times if you’re goosed when the recession comes anyway.

Where have you gotten this number from? According to the BPFI from what I can see it was 2.6bn.

In 2018 it was 8.7bn.

The number of approvals granted has also tripled in that time. So 2 of every 3 buyers in 2018 were not buying in 2012. Everyone thinks they're in the other 1 in 3.

[Deleted User]

In 2012 I got turned down for a small mortgage despite having an exemplary credit record and a 40% deposit and a very secure job, We just went to another lender and got it no problems.

pearcider

It’s not luck. It’s called the business cycle and we are clearly at the end of a big one. Buy at your peril.

[Deleted User]

pearcider wrote: »

You could get a loan in 2012 if you had a secure job and a good deposit and a credit history. There was 6 billion euro drawn down in 2012 with the average FTB mortgage of 153,000. Average FTB mortgage last year was 220,000. Let that sink in.

If you can’t rely on a job and savings in the bad times why would you want to overpay in the good times if you’re goosed when the recession comes anyway.

Unless you are in the public service or some supermarket retailer ( because people have got to eat ) a recession will affect your working environment/ job you sound very nieve.

Get a time a machine go back to say 1997 and tell all those civil engineers and architects that are graduating in to well-paying jobs in Ireland, that in 11 years time the economy will almost have collapsed they will be unemployed.

Savings: do you really think a couple with a mortgage and children are going to save enough to carry themselves through a few years of a recession.

We did very well out of the collaps in property prices however it was an accident or luck take your pick.

pearcider

You could get a loan in 2012 if you had a secure job and a good deposit and a credit history. There was 6 billion euro drawn down in 2012 with the average FTB mortgage of 153,000. Average FTB mortgage last year was 220,000. Let that sink in.

If you can’t rely on a job and savings in the bad times why would you want to overpay in the good times if you’re goosed when the recession comes anyway.

ELM327

Mike9832 wrote: »

Waiting is for people with significantly above average means

People who do not need a mortgage to buy should probably wait.
But for the rest of us mere mortals who - despite the screeches of the loony left - are not rich with 100k-120k combined salary - we must go now when banks are giving mortgages. I remember the last crisis. I wanted to buy an apartment in Blanch as an investment, they were listed at 90k, just over twice my income at the time. Bank wouldn't give me a loan.

Same apartment now is probably closer to 290

[Deleted User]

Interested Observer wrote: »

This, imo, is rubbish advice. In the event of a recession the number of mortgages approved will collapse. Thinking you can take the 'benefits' of a recession without it touching you negatively is absolute fantasy.

But that is the point, its a little fantasy for some akin to a small loto win and that is perfectly fine as long as they are not taking it seriously as a strategy for buying a home.

[Deleted User]

pearcider wrote: »

Wait for the recession.

This, imo, is rubbish advice. In the event of a recession the number of mortgages approved will collapse. Thinking you can take the 'benefits' of a recession without it touching you negatively is absolute fantasy.

Mike9832

Waiting is for people with means

[Deleted User]

pearcider wrote: »

It’s all speculation of course but I wouldn’t buy now. Prices have doubled since the bottom in 2012. So clearly not a good deal. Ireland is highly exposed to a downturn in the US economy which is in its 121st month of expansion - the longest in history. My advice. Wait for the recession.

The intellegence of some people who are contemplating the bigges financial out lay of their life you would have to wonder.

I presume purchasers are not just taking advice from strangers on the internet and have factored in the trolling element threads like this attrac

Everyone did not do benfite in the purchases of a property when the celtic tiger collapsed, finance for properties became more difficult to get unemployment rose very rapidly( of course that is never going to happen to them its going to be all good )

Its amazing those who think a downturn will benefit them and have no negative effect on them at all and are unable to see all the circumstances.

pearcider

It’s all speculation of course but I wouldn’t buy now. Prices have doubled since the bottom in 2012. So clearly not a good deal. Ireland is highly exposed to a downturn in the US economy which is in its 121st month of expansion - the longest in history. My advice. Wait for the recession.

riclad

Lets say theres a crisis when brexit happen,s ,
you might find it hard to get a large mortgage.
Or you will need to have a larger deposit ,than at the moment.
prices went up by 2 per cent in the last 12 month,s.
According to move, sunday times survey.
So you wait for 2 years ,
that means you pay rent for the next 2 years .
My advice is buy now or wait for 6 months .
Theres a small amount of new house,.s for sale ,
over 300k .Builders seem to find it easier to build apartments .
No one knows what will happen,
so saying i,ll just wait for a 10 per cent drop is risky .

cgcsb

Read the Q2 2019 daft report. 3 bed semis are dropping in value in all dublin postcodes, largely due to a lot of new suburban stock being built. The price of 1 and 2 bed apartments, especially in central areas continues to rise, mostly due to limited stock and very few new schemes will be finished in the immediate future. If you wait till early next year the price of the 3 bed semi may bottom out again because supply is still very tight.

I think a lot of developers lost the run of themselves in the present cycle, asking for 350k for suburban 2 beds, word on the street is people aren't paying it, and are paying even less for the second hand stock, especially in traditionally kosher areas where overpricing is a religion. There's certainly no panic to buy in the family homes market. Smaller units are where we'll see price growth for the next few years.

Darc19

If you've got a very good mortgage rate (avoid ptsb and Boi) and come across a property that you know you can live in for at least 6-8 years, then go for it.

Prices may drop back a small bit, but that's very much at the middle and top end. The more affordable properties are still rising at a low rate.

But there's no mad rush, so just wait for the right property and pull the trigger. With exceptionally low long term fixed rates, it's way cheaper than a mortgage.