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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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[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

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]

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.

[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.

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.

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.

[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.

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.

accensi0n

mariaalice wrote: »

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

:eek:

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

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.

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.

Wesser

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

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

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

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

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.

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!..

[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?

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.

Edgware

A big part of the last property boom was the massive construction around the country.
Holiday homes, sapartment, housing estates being built in towns and villages of low population with no thought as to who was going to live in these buildings. We ended up with hundreds of ghost estates.
The Dublin market with its population and concentration of I.T. companies etc is a completely different market. Wll the new man in the Centra Bank ease the mortgage requirements. Anecdotally I know several professional couples waiting to get out of one and two bed apartments and into 4 bed houses. If the rules are relaxed there will be demand for such houses. This demand will be met either by empty nesting or new builds. The four bed in Ballinteer will be in the demand and will rise in price

Darc19

jim salter wrote: »

What we're facing is gonna be worse than 2008

Not a chance in hell of anything like the last recession.

The conditions are simply not there for it.

In 2008, banks were throwing money at people with no questions asked and everyone out bid everyone else on everything.

A 3 bed semi in ballinteer was 650k and interest rates were 5%, a similar one now on the same road is 475k

Take a 25 year mortgage @90%
Today's purchase with 427k mortgage would cost €2,000 a month on 10 year fixed (peace of mind)

In 2007 a five year fixed rate was 5%, 10 year was not available. So 5 year fixed @585k would have cost €3360/month.
Hence banks signed you up for 35 year mortgages.

So the net cost of then v now is 40% lower and you can be sure of payments for 10 years.

So costs of ownership is nothing like the boom times.

hmmm

Interested Observer wrote: »

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

The US budget deficit in 2018 was 779 billion, not 1.5 trillion as he says. I think I'll get my economic advice elsewhere.

pearcider

Sorry my figures were out. I don’t check them before I post as I’m not writing a peer review paper here. However the thrust of my argument is unchanged.

https://www.bloomberg.com/news/articles/2019-06-12/u-s-budget-gap-hits-739-billion-with-four-months-left-in-year

The US is now incapable of bailing out the world and the worlds banks as they did in 2008 and the recession must be close as the US is now in its longest ever economic expansion. Therefore the recession is quite close. Unless of course you believe we are in a new paradigm and there will be no more recessions...

If you can afford to wait, I would wait. You want to buy property and other assets that are tightly correlated to credit when credit conditions are poor, which is not the case now. At the moment it’s a sellers market.

pearcider

I would also say that in Ireland our budgetary situation remains very grim and there are significant macro risks to our country quite unrelated to our correlation with the US economy.

1) Brexit which will greatly affect our economy.

2) No significant pay down of our national debt which is 200 billion up 165 billion from our situation in 2007...at the moment the interest is manageable as the ECB is buying bonds but the debt is a drag on growth. I would also note that a German 30 year bond auction (with negative yields) failed today. The risks in the bond market are growing and with over 15 trillion in negative yield debt the entire market is clearly unstable.

3) When you consider our favorable demographics, employment numbers and the fact that we have had massive (if somewhat dubious) economic growth in the past few years and then realize we are still running a budget deficit...The potential for emergency tax increases here is high. This will bring down property prices significantly.

utmbuilder

gosh with the price of rent now, you could be loosing 24,000 a year in rent not buying.

its unlikely to be a property crash, maybe slow growth when we are up to our nuts in new builds.

mortgage draw downs are slow, will be even slower when the public feels the impact of brexit, still
old builds will hold their value due to social economic factor's of diversity with new build owner and tennentship

If its a forever home and within 20 minutes commute of work I dont think sitting by will save you much

DubCount

I'm impressed with the knowledge many posters have about the economic outlook for the property market. The reality is, nobody knows what way property prices will go, especially on an area by area basis. This time next year, prices may have fallen or increased or stayed the same. The same is true of 3 years time. Issues come and go. Brexit is a big deal today, it will be something else in 3 years time.

Instead of trying to second guess the market, consider your own finances and ability to meet mortgage repayments, and your desire to live in a particular area for a long time. Property is a long term purchase. 20 years from now, nobody will remember Brexit, and whether you waited a couple of years to purchase will be a distant memory

reg114

We've been trying to sell a property in the south side of the capital since January, and its my experience that in the mid to upper range nothing is moving , this has also been backed up by estate agents I've spoken to. Since the last bust we have had multiple years of economic growth and price rises but the global economy has been showing signs of a correction . Germany is on the brink of a recession, American manufacturing output figures are down and Trumps tariff war with China is having an adverse effect on consumer sentiment in the US. Throw in the massive unknown that is Brexit and the high liklihood of a recession in the UK and its ramifications on the Irish economy and you see reasons why people are becoming twitchy here especially when it comes to buying property.

Ultimately if people feel that property has a good chance of coming down in price in the short term then its only human nature to want to sit and wait for a drop despite a property being a long term investment.

Personally I believe theres a perfect storm brewing for Ireland and by next year we will be in a full blown recession due to a no deal brexit, German recession and a further global economic slowdown. You will see an exodus of foreign nationals from Ireland which will free up large amounts of rental properties which will have a knock on effect on the residential sales market and property prices. I'm convinced of this.

Addle

What do you consider mid range to be?

mloc123

The Nutty M wrote: »

Wait another 2-3 years in or around. It'll be easy buy houses again.

If you have cash to buy...