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Buying a house in 2021??
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18-10-2021 8:04pm#1
Hi all, I am looking for advice on buying. My partner and I have been mortgage approved for quite some time now. We have lost out on 3 properties in bidding wars and finding, like I’m sure many buyers!, that there is very limited supply at the moment.
We’ve started to look at 3 bed houses but finding they are over budget and usually very small.
I guess what I’m wondering is if we should settle for a house that’s not quite what we’re looking for (we are not willing to move further out) or try and wait it out and save more money to get what we want and buy in a year +.
We are both professionals with good wages and have a substantial amount of money saved and are very fortunate to be in a position that we could move home to save so there is no immediate urgency to buy now. We have considered buying now and trading up in a few years but feel we’ll be in negative equity in 3-5 years but also looking at how long we have been looking and other areas of our lives have been put on hold to buy a house so that is a big consideration too. Prices seem to just creep up month after month so should we just bite the bullet and buy 🙃
I know nobody has a crystal ball and can see in the future but would be interested to hear people’s perspective who bought in the boom or even people recently and see what they think.
Post edited by Boards.ie: Niamh onTagged:0
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I'm going to suggest this is moved to the 'Accommodation & Property' area where you'll get more feedback. This Construction & Planning area is more to do with building a house.
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Boards.ie Community ManagerJoin Date:Posts: 10871
Thread moved to Accommodation & Property forum.
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Personally, I'd go with settling. If you both can agree on what to compromise on then that's a huge hurdle overcome immediately (in my case, my partner and I had different priorities that made agreeing on properties difficult). I'd also brace yourself and prepare to do a lot more bidding before you strike it lucky. If you got it after 3 attempts you'd be doing very well. I'd say 10-20 is more typical based on my own experience and others I have spoken to, but this will also depend on other things like what position you're in to bid relative to what you're looking for (e.g. if you're regularly able to bid far over asking price on places you'd like then you'll have an easier time).
I personally don't think there's much value in lying in wait if you can get something you'd like now. Predicting a bust is impossible. For all you know, it could go down in 2022 or just continue going up for 10 more years. If you're not in a hurry then that does help, because you have less pressure to move quickly, but I'd say to still keep an eye out for things that go up for sale. The only reason I would consider waiting really would be if one of you expects you could get a substantial salary increase in the near future, which would increase the amount you could borrow. I don't know your savings situation but for most it takes quite a while just to save up a deposit of 10-20% of the value of the mortgage, so it would take very long to get to the stage where it makes a meaningful difference in how much you could put in on a property.
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I would buy. Think of it as a starter home. You may not get everything you want but that’s normal for a first home. You can trade up in a few years. I hear what you’re saying about negative equity but if the market turns and you haven’t bought you could be stuck unable to get a mortgage etc. There are more losers than winners in a property crash and it’s nigh on impossible to predict who’ll do well out if it. Your monthly savings are unlikely to outstrip the growth in prices by much so waiting won’t increase your options hugely while prices are rising like they are at the moment. If you’re really worried about the market dropping, one option to consider is getting a house that works ok for now but where you could extend to the rear/side/into the attic in a few years if you need more space and you can’t sell. Good luck!
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I think it depends on what you're going to have to compromise on.
We bought last year, and I have zero regrets. We each made a list of what we wanted, and then kept an eye on daft for a while. Then before we actually started viewing places, we went back to our lists and discussed what we were willing to compromise on, and negotiated our 'must-haves'. It was only during this process that I realised what my 'must-haves' really were.
Buying a place is a commitment - it's not forever, but it will require your time, energy, and obviously a financial investment, not all of which you can get back if you sell. So I don't think you should compromise on anything that's truly a 'must-have' for you.
That said, loads of my friends are trying to buy at the moment, and so many of them are looking for 3/4 bed, semi-detached/detached, family home, in a nice neighbourhood, inside the M50 and near a DART line. They're essentially looking to buy a house just like their parents'. I'm hugely sympathetic to the fact that we're in a housing crisis, so I by no means think this is a problem of their own making, but with so few options out there I can't help but think they're limiting themselves to a small portion of an already limited market.
I would definitely advise buying, and keeping an open mind, but don't ignore your absolute must-haves.
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Draw up a list of the bare minimum expectations, so you can both refer back to it. And keep looking, you might just find something in your budget that doesn't feel like settling. Watch out for properties that can be expanded out to the side, back or attic you might just grab something you can upgrade as life goes on.
Be super careful about desperate bidding. After you lose a few there is a bit of an urge to get something, anything and it's terrible. Draw up pros and cons, refer to your list, seek a second or third opinion from family or friends,do not listen to estate agents and their time pressures.
I was in your shoes - young profesh couple , bought a starter and traded up, no regrets. Key to my decision was looking at the price history - When were prices the lowest, 2009? it was 2013! Took 4 years of steady falling to get to a low. I suspect even if a catastrophic market crash happened today, it'll be a few years until we're scooping up bargains, and even then you're looking at job insecurity, tighter lending, generally less housing being sold. I don't encourage rushing into it, but I wouldn't say waiting is necessarily a good idea either.
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Thanks for the reply. It’s just so disheartening having knock back after knock back on bidding and now it seems houses are already at asking price before even viewing. Not looking for a sympathy vote, as know the process is never easy, but finding now that 3 beds in our desired areas are 70m2, already 50k over asking price and going 50k more. It just doesn’t seem worth it to have sacrificed time and all the savings to have to buy an overpriced property we will have out grown in a few years. I understand we’ll have to “settle” for areas that are our number 1 areas to buy in but seems that all over Dublin is the same!
I know, it’s so hard to predict the future but we are in secure jobs, have been so fortunate to have pay increases and have 25% deposit saved. It took us, as you said, a long to save this so it’s so hesitant at buying now.
thanks for your advice, much appreciated
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Thanks for your reply. I know not everyone gets everything they want on their first home and have looked at that in the past year and settled on some “non-negotiables” but location is one we’re not willing to compromise on.
Good point about monthly savings not being greater than rise in prices so see your point about not waiting to buy but now we’re finding that we are priced out of our number one areas and where before we could afford 4 beds there are now 2 beds going for our budget. 🙃 I just don’t want to have to sacrifice all our time, living apart for 3 years and our savings on an overpriced shoebox so wondering what the best thing to do is.
Really appreciate the advice and your good wishes… we need it!
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Thanks for your reply, some very sound advice here.
I suppose the one big thing were unwilling to compromise on is area. We’re willing to buy a fixer upper and do things gradually but area is a non-negotiable but finding while we would have been able to buy a 4 bed a year ago there are now 2 beds going for our budget which is insane! I’m similar to your friends in a way as would have loved the 4 bed but have started looking at 3 beds the last while but they are going way over our budget. Have alerts on daft.ie on but just so disheartened with knock back after knock back. 😔
Congrats on buying your home, I hope our day comes soon! 🏡
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Thank you, some good advice here re upgrading and something we have been looking at it with 3 beds.
We have been in that situation and desperately bidding on properties so know it’s good to keep things in perspective but now properties seem to be at asking price before first viewing !
Good point and we don’t have a few years to wait but wondering if we even wait it out a year will there be more supply but understand it’s impossible to predict.
would you recommend using property price register as a reference for buying now? Maybe looking at sold prices in 2020/2021 as a reference?
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Given that the current price of 4 bed on your area of choice is beyond your budget your options are 1) consider an area where your budget can buy 3/4 bed; 2) buy the 2 bed in the area of choice and continue to save so you can trade up later; or 3) wait when supply increases and prices come down. Option 3 will not happen soon. So it seems that you’re left with the option of buying a 2 bed house in the area…. A 4/3 bed fixer upper may come up but usually they don’t come with significant discount as the location holds the price for them.
I think it all comes down to how strongly you want to have a house now. If rent is manageable and you’re not in a rush, then you can wait it out.
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Hi, thanks for your message. Area is a non-negotiable for us and unwilling to pay over half a mill for a 2 bed which will probably lose 200k in value in 5-10 years. It would also be difficult to save to trade up when our mortgage amount would still be the price of aforementioned 3/4 bed!
we have no issues buying a fixer upper but the price for some I’ve seen are a joke: no heating systems, completely gutted, mould, no roof, collapsed floors… I’ve seen it all. I just think it’s poor greed to expect money for a shell.
as mentioned in my initial post, we are lucky enough not to have rent so are not under pressure to buy now. My question was to people who had bought maybe in the boom/recently and see their perspectives.
thanks for the response!
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I think the assertation that a 2 bed is "probably" going to lose 200k in value within the next decade is highly speculative and not really probable at all. There's really not much reason to suspect a 2-bed is going to lose value any more than any other size of house or apartment, and it's very hard to see housing values deflating to the point that property will drop in value by 40+% over a few years, even if there is a recession in that time. If people want to live somewhere badly enough to pay €500k+ for a 2-bedroom there now, it's likely they will continue to do so into the future given that our population is growing and we are not building new places fast enough to house everyone.
If this is a major factor in your decision, I'd really say you should reconsider.
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In absence of a crystal ball, historical data is best you have and you can at least use it to form expectations on how much prices are changing and what a year can do to them. This is a nice friendly source you can use: https://proper.ie/
When I was shopping I went and did my own digging with the data (download all button) but most people can't or won't do that, if you end up using this just filter out the 'not full price' : https://www.propertypriceregister.ie/
It's fully personal opinion, but I don't see things improving in just one year. We had a housing crisis before covid existed. Construction of new homes was slow or at best struggling to keep up even during that time. I don't know where people are expecting this extra stock to come from now. I think at this point the only thing that can materially dent the trend (of increasing prices) is a major economic or policy change.
Two main things I'm looking out for 1. central bank interest rates increase, driving rates up, affordability down and therefore cut at the demand (by pricing people out of the market) or 2. The current CB lending rules will be eased, or an affordability based model will be used instead of the 3.5x salary rule. That will increase people's budgets , increase demand and send the prices up. A rates change could happen overnight, the rules not so much.
But hey, you have time - use it. Keep an eye on the market you might find something you like. Good luck :)
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Nobody can really tell you what to do. Prices are unlikely to go down much in the next 12 months. How will you feel if you wait a couple of years for the bubble to burst and prices are still climbing? I knew people who were predicting a property crash in 2001. It was a long time before those predictions came true and a lot of life can happen in those years. Are you willing to put all that on hold in the hope that you save some money? I know it's hard - 9 years ago houses just like mine and on my street were selling for less than half of what we paid last year. It sickens me when I think about it but I'm not going to wait for the bubble to burst so I can be as lucky as those few neighbours who bought at rock bottom.
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Thanks a mill, didn’t know you could download data from property price register and wasn’t aware of the other site you recommended so thank you!
thanks for your advice- definitely food for thought!
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Hi, thanks for your comment. I wasn’t asking for people to tell me what to do but was looking for people’s perspectives; particularly those from people who had bought recently or from boom.
We won’t be waiting for a few years but was wondering would it be worthwhile to wait it out for a year maybe to see would more stock come on the market and also we have more earning potential thereby increasing our budget (we both, all going well, will have pay increases in next year) but understand that’s a personal choice and have to make our own decision on that but have been so grateful to get other people’s perspectives here.
I acknowledged in my post we have sacrificed time and have paused other areas in our personal lives to buy a house. It’s just as you said it’s disheartening to see the cost of houses now when we have sacrificed all that time saving when we could have advanced personally but that’s the risk you take.
Thank you for your post!
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I read my post back and it has a negative tone I hadn’t intended. Sorry about that. I know you’re not looking to be told what to do. It seems to me you’d like some reassurance. I know that I was exactly the same buying last year when everybody was predicting Covid would tank the market. It’s a huge decision when there is so much uncertainty.
If you think your salaries and therefore your potential mortgage will increase soon then it might be worth waiting. But it does look like prices will keep rising in the short term so you need to factor that in.
I saw somebody post is another thread that many of his friends had bought during the boom. He said he felt sorry for them after the crash but that now he is still looking to buy and they have paid off half their mortgages and moved on with their lives, he’d rather their situation than his own. We took a similar view when buying - in 30 years the prices will have gone up and down and it won’t really matter to us. But if you don’t think the house can last you 10-15 years then it’s a more difficult decision. Good luck!
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We bought right at the peak of the boom in 2007. We paid the most by a long shot in our estate for our 3 bed. Not 2 years later, the house right next door to us (the other semi d) sold for half what we paid. That was a VERY bitter pill we had to swallow, living in unspeakable negative equity. We had to suck it up and get on with our lives. Which we did. A year ago we decided to sell up and move to an another area. Very nervous because of covid and the predictions that were being made about house prices plummeting. House went on market in June, big bidding war, sale agreed in a matter of days for more that we paid day one. We are closing on a house in the area we want to be in on Monday.
In a nutshell - there is absolutely no predicting the property market, having our over priced house for 14 years (stress of negative equity, silly mortgage repayments, struggling to pay for childminders) and selling has enabled us to buy in the area we want to be in... taken the long road but if area is negotiable for now it might just be worth it.
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Hi OP,
Apologies if I come across as direct or rude, I really don't mean to but wanted to add a few points here:
- We bought in June (albeit in Scandinavia which is worse than Dublin for a hot market) but teased with the area we wanted to live in. We have rented in 3 of the nicest places in the city we live in. We realised that we could buy a property in the area we wanted but not the property we wanted. When we were looking around we found a few areas we would like to live in with a 5 year plan to move to another area if we are lucky enough to have kids. We bought on the edge of one the popular areas last June and so happy here. To get to my point, based on your post above, you cannot afford to live in the area you want. You are highly unlikely to find the deal you think you want and the price is the price. Why not move 10/15 mins further out and buy a better property?
- I have had discussions with friends who were saying: We have to live in X area because it is right next to parents, friends or we can have people over all the time. 99% of the time it is the couple only in the house and the people who say they will be over all the time won't be. Don't buy a place for others. I am not saying you are but it is a common thing to hear.
- You cannot time the market and anyone who says they can is a liar! The Scandic Banks and Fed Reserve have basically said they are freezing rates for the next 3 years and ECB will be similar. You have said that you could potentially lose €200k on a property in 5 years. With all due respect you have little knowledge of market dynamics and by the sounds of it what caused the last housing crisis. Don't try and time it, you won't (I can't either btw and I have worked in the area).
- It may seem ok to live with your parents but if you can afford to buy move out, just so you and your partner can get on with your lives together
- Salary increases are tough (if not impossible) to keep up with in this market. Between my partner and I we earn about €150k and we could not keep up. I moved job this year for an easier life and we were earning over €180k. With price increases we could not afford the place we live in now! It has increased approx. €30k since we moved in (met the broker on Friday when walking the dog and told us what a similar apartment across the road sold for 2 days prior).
- We have a couple friend. They had a budget of approx. €750k 18months ago (I know insane money!!). They were so picky with an area, then another area and another. If it wasn't the area it was something wrong with each apartment (like super minor things). Honestly, it was exhausting listening to them considering their budget. He drained his whole pension just at the market drop to buy an apartment. They still haven't bought today. All the type of places they have looked at are 15% higher now and they cannot get anywhere near what they want. They are now bulling that they didn't buy. Considering the loss in his pension gains, what they could have bought for then vs now and rental costs, they are down about €150k.
- There is a lot to be said for getting on the ladder and getting started, especially as covid reduces and people may start moving back to Dublin and buying
- It is awfully slow to build houses in Ireland so supply won't increase that quick
Best of luck, with it all. We lost multiple bids before we got our place and what we thought was a near dream property. Looking back we were just caught up in the frenzy and are delighted we got outbid and where we are now.
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I know you said you don’t want to compromise on location. I felt the same but actually ended up buying slightly outside where we had wanted. The address is different than where we were looking and I ruled the house out at first for that reason. Luckily somebody sent me the ad and I took another look because it turned out to be very close to the areas we wanted - about 5 mins by car and similar on foot thanks to a path linking the estate to a main road. The address is less salubrious than the area it borders, but it’s actually a lovely mature estate with a great community and I’m so glad now that it isn’t the other address because I’m convinced it would have cost us an extra 50k+. Anyway, I was doing my property tax return and I thought the map Revenue have produced with average property prices by area could be very useful for house hunters. Might help you identify areas that are close to your desired location but have less expensive housing.
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Hi,
I didn’t see your original message so can’t tell if you’re being direct or rude 🙃
- We can afford to buy where we want but wanted a lot of boxes ticked which in hindsight was above our budget, but not hugely so. We, probably more me, have adjusted our expectations based on current climate and have 4 house viewings arranged in our 3 key areas. That will always be key for us. We rented in an area 5 years ago which was different from where we were used to living. I was miserable for the year so will not be making that mistake again.
- Our house was always going to be bought for us and no one else. Family/friends aren’t going to be the one living there or paying the mortgage so this point never crossed our minds.
- I understand I can’t time the market and never claimed to. A drop of 200k was an extreme exaggeration and probably showed my frustration at the time at the housing situation. But truth be told, I don’t think there is good value buying now but understand the market is the way it is.
- There is no rush on either of us to leave as we are the only ones at home with our respective parents and they understand the market is tough at present but of course we would like to live together but will not be buying for the sake of it.
- I have a guaranteed salary increase with my contract, my partner’s increase is more precarious. I take on board your point about earnings not matching increases in housing market which another board member mentioned, something to be honest I hadn’t considered.
Thank you for your post and congratulations on your new home. Hopefully we’ll be getting one soon! 🏡
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As someone buying now and in the same boat, my solution was to buy something on the cheaper end as when interest rates rise and prices fall it won’t have lost so much relative to renting.
Especially if you can get 30k HTB. If you factor the increase of 10k in the HTB I’m paying 9% more than someone would have paid in 2019 for a similar unit in the estate. Building costs are probably up this much. Personally I would avoid any bidding wars or anything that has gone up 20% plus.
Supply will increase in the new year too.
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If interest rates rise it will be because of inflation. If we have inflation it will mainly be because of higher energy costs due to carbon taxes. I was a teenager during the oil crisis of the 7O's, it drive everything up in price. The one benefit of energy inflation is the money will not be leaving the country it is generated in as opposed to oil crisis money going to the middle East.
If we have inflation it unlikely to drive down house prices, it will increase labour costs as wages will have to rise. If wages rise labour costs rise. Yes supply should increase and put a damper on house prices but I cannot see a substantial gall at present.
Slava Ukrainii
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Well there has been substantial property price inflation since 2013 with not much of a change in wages relatively so I wouldn’t hold my breath that wages especially after tax will keep up with inflation.
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Houses were below building costs right accross the country in 2013. It was 2016/17 before they started to reach cist of development in Dublin and the test of the country lagged behind. You can still buy houses below building costs. General inflation was very low during all this time. Now we are entering a time of general inflation which will be reflected in wages
Slava Ukrainii
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Well I do hope to see my wages go up so I won’t argue 😂
Just as an aside, property market has started to turn in the US on the back of rising mortgage rates/better supply. Ireland will likely lag by 6-12 months as they did when prices rose over the last 1.5 years. Zillow which tried to flip houses now facing large losses on its property book.
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As smouse said iirc we'll build over 30k houses next year compared to 20k last year. COVID pent up demand will be long gone, interest rates may start going up I dunno.
In my area the councils, charities etc are doing serious buying , I don't believe the government can keep lashing the billions out if their interest rates go up n the corporation tax takes a hit
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Hi all,
I have been offered to buy a house unexpectedly, I have a 25% deposit and the mortgage would be less that two times my salary. However I am still in my probation period of a new job, under a one year contract. Has anyone any any advice or experience where I could start to try and get a mortgage? Thank you.
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If the lian is sub 100k try a CU, yes the interest rate may be higher but when your probation period us up you can regularise the mortgage. Or try a bank for an unsecured loan
Slava Ukrainii
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