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To buy or wait?

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    #32
    Mr. Loverman
    Closed Accounts Posts: 4,001 ✭✭✭Mr. Loverman


    Ray Palmer wrote: »
    Because it is not available in other countries either. The house is huge approximately 3+ times the size of an average house. Tell me where an above average house is availbale for the couple on the average wage of that country.

    USA, Germany, France.


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    #33
    Mr. Loverman
    Closed Accounts Posts: 4,001 ✭✭✭Mr. Loverman


    Remember Galway has less than 250k people living there, which is tiny compared to most cities, so it should not be compared to places like London or Manchester or Liverpool, etc. It should be compared to Redbridge, South Gloucestershire, Walsall, Rotherham, Hillingdon, Medway, etc., i.e. unimportant cities.


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    #34
    ShadowHearth
    Registered Users Posts: 22,929 ✭✭✭✭ShadowHearth


    Diarmuid wrote: »
    If I was getting as done over as you on your rent, I'd want to buy too. Your landlord is getting an 8% yield on that rent, Ireland hasn't see those rental yields in *years*

    Hmm I might made a confution there a bit.

    I am paying 650 for a 5 bedroom 2 livingroom 2 kitchen 1 garage house with close to town. Only 2 of us living there. We wanted nice house so we newer minded paying that money. We live there 2 years and we got that house for 650 where sake houses were going for 800eu per month. In all fairness we domt need such huge house. We even use one of the living rooms as bedrooms as it has fireplace and telly :).

    Property we found is about 80k it's a 3 bedroom house with big yard. Enough to park all 3 cars and have plenty of space for misses gardening. That house will work out 390eu per month, which pretty nice for us. Ofc it will need some painting inside, but we can move I'm and do work ourselfs. It's not that hard, we are not fussy people. Done that before.

    If you plan to buy small cheap property, then time is good. If you whana buy anything above 150k it's bad.


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    #35
    Ray Palmer
    Registered Users Posts: 8,364 ✭✭✭Ray Palmer


    Mr. Loverman wrote: »
    USA, Germany, France.

    Not a chance in any of those places are you going to be able to afford a a place 3 times larger than the average household close to a city on average wages.
    You maybe unable to compare like for like or unwilling but not much point in deluding yourself. The situation you have suggested is very unlikely but feel free to live in hope.


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    #36
    GaylaBells02
    Closed Accounts Posts: 24 ✭GaylaBells02


    do what makes you fill happy


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    #37
    careca11
    Closed Accounts Posts: 418 ✭✭careca11


    tuam_sham wrote: »
    Hi Everyone,

    I am currently thinking of buying a house that is for sale in Cregmore which is approx 9 miles from galway city center, 4 miles from new dublin motorway and less than 5 miles from athenry, claregalway and Oranmore. The +'s to this house are. Its a great location for me and my family, close to town but yet has a country feel. Its 10 years old and has been fully updated in the last 2 years. It is 3000sq feet on 1/2 acre and it is in show house condition inside and out. The current owner looks to have spent alot of money replacing bathrooms, kitchen and landscaping gardens. Its very close to the local national school which is handy for our 2 young children. theres a golf club around the corner as well as football pitches.
    Its an area we have been looking at for quiet a while and there are rarely houses in the area for sale or at least if there are they are very dated and would require a lot of work.
    The -'s are. It has no garage just a small wooden shed but I can always build one down the road or get a bigger wooden shed. I suppose the biggest delima for us and many others out there is should we buy or wait?

    I am told the current owner has only lived here for 3 years and is moving abroad hence the sale. They are being very upfront about their bottom price. They paid 476K for it in 2008 which sounds believeable and claim to have spent approx 50K - 60K on renovations since which again looks to be believable based on the homes pristine condition. They are asking for 350K. I am leaning towards making an offer but don't know what's a fair offer. I would really appreciate some opinions!!

    why do you want a 3000sq foot house (unless of course you have army of kids )
    your nuts to buy in this day and age ,
    rent if you can ...its safer , at least with regards to losing your job the social would supplement you rent allowance,
    whereas if you bought and then lost your job ....you risk losing your home if you cannot meet the payments on your mortgage (@350,000 over say 30 years at 5%....your looking at €2,000 a month (UTTER MADNESS)


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    #38
    Mr. Loverman
    Closed Accounts Posts: 4,001 ✭✭✭Mr. Loverman


    Ray Palmer wrote: »
    Not a chance in any of those places are you going to be able to afford a a place 3 times larger than the average household close to a city on average wages.
    You maybe unable to compare like for like or unwilling but not much point in deluding yourself. The situation you have suggested is very unlikely but feel free to live in hope.

    I used to live in the US and my girlfriend at the time lived in a very large house outside a city bigger than Galway. The house was worth about 150k.

    I have a friend in France who lives outside Lyon (20 minute drive) in a very large house with land which is worth about 200k.

    I have a friend in Germany (Berlin) who lives in a huge apartment which cost 200k.

    Lyon and Berlin are far superior cities when compared to a little place like Galway.

    You still have your property bubble glasses on. Ireland is not a rich country.


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    #39
    turbot
    Registered Users Posts: 1,106 ✭✭✭turbot


    My advice - based upon informed sources - is wait and do not buy - at least until the yield you can achieve from renting more than offsets mortgage payments at 10%.

    Why?

    The value of houses is relative to the cost of, and the availability of, money.

    Right now, it's nigh on impossible to get a mortgage.

    The banks are nationalised, and the effective rate of interest for them - i.e. cost of money for government / banks (same thing right now) is 6%. To cover their overheads, banks will need to add a few % on top of this - making the effective interest rate on a mortgage at 9 - 10%.

    Not only this, but there will be much more stringent regulations to get a mortgage. No more 100% mortgages. Bigger deposits. Shorter terms, etc.

    The value of a house is proportional to demand. Ireland has a huge excess stock (I've head 350k units) of houses relative to population and population is dropping as people emigrate. The difficulty in getting a mortgage will simply constrain demand - meaning far fewer people will be eligble to buy. Plus, many of the existing mortgage holders with decent income are now facing negative equity.

    If you study the economics of crashes, you will see that the extent of the fall is proportional to the length of the boom. Ireland has had one of the longest booms in history. We haven't hit the bottom yet and things are still getting worse. Leading economists predict that the real fall out (i.e. most mortgage defaults) will start in 2015.

    Banks are also starting to get much more aggressive with people in default, to take property of their hands. This will inevitably lead to properties being sold in a firesale like auction.

    Plus, Irelands economic position is not getting better, and there is a serious risk of default.

    When you take all these into consideration, if the long term rent achievable in predictable economic conditions - from the property you describe is - say - €1000 / month (which may be optimistic) - then you should estimate the market value of this as equal to rent on a 10% mortgage - so perhaps this property is worth €125k.

    In other parts of europe, equivalent properties with equivalent amenities are available for prices like this. On the North west coast of germany, for example, there are cities where you can buy a 1000 sq foot apartment for €20k and sometimes less.


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    #40
    Ray Palmer
    Registered Users Posts: 8,364 ✭✭✭Ray Palmer


    Mr. Loverman wrote: »
    I used to live in the US and my girlfriend at the time lived in a very large house outside a city bigger than Galway. The house was worth about 150k. etc...
    So you actually don't know how to compare like for like good to know:rolleyes:


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    #41
    Damie
    Registered Users Posts: 341 ✭✭Damie


    Mr. Loverman wrote: »
    I used to live in the US and my girlfriend at the time lived in a very large house outside a city bigger than Galway. The house was worth about 150k.

    I have a friend in France who lives outside Lyon (20 minute drive) in a very large house with land which is worth about 200k.

    I have a friend in Germany (Berlin) who lives in a huge apartment which cost 200k.

    Lyon and Berlin are far superior cities when compared to a little place like Galway.

    You still have your property bubble glasses on. Ireland is not a rich country.

    +1


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    #42
    donalg1
    Closed Accounts Posts: 3,513 ✭✭✭donalg1


    If you are happy that you can afford the mortgage even with an interest rate rise of 3% or so and you are comfortable in the fact that your job is pretty secure and will be for the next ten years or so i cant see any reason to wait.

    You said its a lovely house in an area you both like, obviously its affordable for you if your looking at it plus you must have been to a bank or two and been informed of what level of mortgage they are willing to give so why wait.

    Banks would have stress tested you when you applied for a mortgage (i.e. if current interest rate is 3% they would have assessed your ability to repay at 6% making sure you can afford it when interest rates rise). A simple way to work out affordability is if repayments are less than 30% of your gross monthly minus current loan repayments (which i assume you dont have any other loans currently as you have got mortgage approval) you should be ok to meet repayments, however the higher above 30% the more the risk increases not just for banks but for you aswell


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    #43
    Mr. Loverman
    Closed Accounts Posts: 4,001 ✭✭✭Mr. Loverman


    Ray Palmer wrote: »
    So you actually don't know how to compare like for like good to know:rolleyes:

    Is that the best you can do?

    If richer, better developed countries have cheaper property in similar locations outside cities far superior than Galway, it would suggest Galway still has ridiculously overpriced property.

    You need to stop thinking property is 'cheap' compared to the peak of the bubble. You need to compare Irish property prices with either pre-bubble prices or (comparable) prices in other countries.


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    #44
    Ray Palmer
    Registered Users Posts: 8,364 ✭✭✭Ray Palmer


    Mr. Loverman wrote: »
    Is that the best you can do?

    If richer, better developed countries have cheaper property in similar locations outside cities far superior than Galway, it would suggest Galway still has ridiculously overpriced property.

    You need to stop thinking property is 'cheap' compared to the peak of the bubble. You need to compare Irish property prices with either pre-bubble prices or (comparable) prices in other countries.
    Pretty petty comment. You obviously don't understand what I have said and have no idea of relative comparison. I am not comparing the prices of the peak to now I am basing it on logical process unlike you who is trying to compare apples and oranges. Cars are bigger and cheaper in the US does that mean an average American car should be compared directly to an average European car to base your purchase on here? The same applies to homes.
    After living in the US myself I know what you can get for your money there is much larger than here. I also know that what applies there is relative to what is in their market.

    The house mentioned here is HUGE by Irish standards and is highly unlikely to be available to a couple on the average wage. If it does I will rent my personal house out and buy it with my savings. As would many other people forcing the price up. If you think this will happen because you think it is comparable to what you have seen around the world good for you. I don't think you have done an accurate comparison and simple do not agree with your estimation of the valuation in the future.


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    #45
    Damie
    Registered Users Posts: 341 ✭✭Damie


    I think you can compare what you like, to whatever you like, where you like, when you like....

    Simple fact is, 350k for a house on the outskirts of a big town(tiny city) is lunacy....same lunacy that has us where we are now.


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    #46
    Ray Palmer
    Registered Users Posts: 8,364 ✭✭✭Ray Palmer


    Damie wrote: »
    I think you can compare what you like, to whatever you like, where you like, when you like....

    Simple fact is, 350k for a house on the outskirts of a big town(tiny city) is lunacy....same lunacy that has us where we are now.
    You can compare what you like what ever way you like but it doesn't mean you are using any form of logic. Lunacy is to assume a falling market makes more sense than a rising market did. Prices will neither go up nor go down for ever.

    Wouldn't buy now either in case people have forgotten I have said that. I still don't have enough information on the house to truly say it is overpriced or not and nether does anybody else either.


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    #47
    Damie
    Registered Users Posts: 341 ✭✭Damie


    Ray Palmer wrote: »
    You can compare what you like what ever way you like but it doesn't mean you are using any form of logic. Lunacy is to assume a falling market makes more sense than a rising market did. Prices will neither go up nor go down for ever.

    Have you been asleep for the last couple of years, logic went out the window a long time ago.
    Lunacy is buying a mortgage for 350k that will cost near 800k at the end of its term for a dwelling that is on the outskirts of a big town. That's all I'm saying, not assuming falling markets or rising market.
    Or using logic or lack thereof. Common sense, remember that, we used to have it in the 90's:p


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    #48
    Ray Palmer
    Registered Users Posts: 8,364 ✭✭✭Ray Palmer


    Damie wrote: »
    Have you been asleep for the last couple of years, logic went out the window a long time ago.
    Lunacy is buying a mortgage for 350k that will cost near 800k at the end of its term...
    Have you got some issue with how mortgages work? Time to grow up and get over it because no matter what that is how it works.
    Damie wrote: »
    ... for a dwelling that is on the outskirts of a big town. That's all I'm saying, not assuming falling markets or rising market.
    Or using logic or lack thereof. Common sense, remember that, we used to have it in the 90's:p
    So you are saying no matter what size quality of build or any other factors no matter what €350k is too much for a location that close to Galway?

    Personally I don't know enough about the property to make that call. I do know it is a very large house way beyond standard housing size and has been recently refurbished.

    My family have been in property a long time and seen similar scares and rantings about who is clever and who is stupid. Jumping to any decision without truly knowing the details is generally lucky if they are right not smart. I do know a house that size is unlikely to be affordable for the average salary in a reasonable market.


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    #49
    Idbatterim
    Registered Users Posts: 17,849 ✭✭✭✭Idbatterim


    350k is a ridiculous amount of money! what would it cost to buy land and build similar house? unemployment took a leap again in april, this is one hell of a vicious circle we are in... Buying a 120k house and having it drop 10% is one thing, buying a 350k house and have it drop by 10% is another thing entirely. I dont really care what anyone says, oh but its your home bla bla bla! Id like to honestly know what is does psychologically to these people knowing that they now have neighbors who have bought for half of what they did! It doesn't matter that your kids education may suffer, you may have to abandon any form of social life, decent car, the odd holiday?


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    #50
    Zamboni
    Registered Users Posts: 4,305 ✭✭✭Zamboni


    Any chance of a link OP?

    It would really help this thread...


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    #51
    ShadowHearth
    Registered Users Posts: 22,929 ✭✭✭✭ShadowHearth


    Zamboni wrote: »
    Any chance of a link OP?

    It would really help this thread...

    only fire and holy water can help this thread at this stage :rolleyes:


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    #52
    Damie
    Registered Users Posts: 341 ✭✭Damie


    Ray Palmer wrote: »
    Have you got some issue with how mortgages work? Time to grow up and get over it because no matter what that is how it works.

    So you are saying no matter what size quality of build or any other factors no matter what €350k is too much for a location that close to Galway?

    Personally I don't know enough about the property to make that call. I do know it is a very large house way beyond standard housing size and has been recently refurbished.

    My family have been in property a long time and seen similar scares and rantings about who is clever and who is stupid. Jumping to any decision without truly knowing the details is generally lucky if they are right not smart. I do know a house that size is unlikely to be affordable for the average salary in a reasonable market.

    Eh, not sure where to start. I'm aware how mortgages work, its you that seems to have trouble with the whole idea. Because you are not in negative equity then everything you say must be true?

    If a house is bought now for 350k, they are in negative equity, unless of course you are telling me that we have reached the bottom and the only way is up?:rolleyes:

    Anyone that says that this house(regardless if its lined with gold) is a good investment is either an EA or someone that has something to gain.

    What happens when this country defaults? When money will cost 10%? When it will be near impossible to get money even at 10%? When unemployment rises? When there are more cuts to the public service?

    But you're right of course, I just need to grow up.....dear god!


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    #53
    Ray Palmer
    Registered Users Posts: 8,364 ✭✭✭Ray Palmer


    Damie wrote: »
    Eh, not sure where to start. I'm aware how mortgages work, its you that seems to have trouble with the whole idea. Because you are not in negative equity then everything you say must be true?

    If a house is bought now for 350k, they are in negative equity, unless of course you are telling me that we have reached the bottom and the only way is up?:rolleyes:

    Anyone that says that this house(regardless if its lined with gold) is a good investment is either an EA or someone that has something to gain.

    What happens when this country defaults? When money will cost 10%? When it will be near impossible to get money even at 10%? When unemployment rises? When there are more cuts to the public service?

    But you're right of course, I just need to grow up.....dear god!
    What are you on about? Just because of my own personal finances I don't claim to have any special knowledge. You are projecting what you feel about the current climate on to me in a very bizarre way.
    Negative equity is not a given as you don't know the size of the mortgage they are taking out. Indicating you don't understand the terminology.

    You are assuming a large amount on your ability to know the personal finances of the OP and the future. Somethings may be possible but the leaps and jumps tacked on after that are massive.

    They are separate arguments to the value of the property anyway.You are completely running amok and off the point of if the property is worth anything.

    I personally wouldn't buy now but the reasons you have stated are little overboard IMHO. Your view smacks of the views of people who said prices would keep going up.


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    #54
    pegasus425
    Registered Users Posts: 41 ✭pegasus425


    Just to come at the issue from a slightly different angle...

    Could you estimate the cost of replicating the property. Buying an equivalent site. Building the house with all associated service connection charges - landscaping etc.

    It is hard to make a judgement not seeing the details of the actual property in question. However using the basic parameters of the property you have outlined, 350K does not seem to be outrageous to me (especially if valuing the property on a cost basis).

    This is not to say that house prices will not continue to fall (and in many/most cases prices will probably fall well below intrinsic/cost value). Evidence does seem to inidicate a little acceleration in the rate of price falls over the past 3-4 months.

    Another issue to take into account is that regardless of where the market is or is going, someone else may see value and buy the house before you. If it is the house for you and it ticks all the boxes, then this is another consideration. Are there other houses currently on the market that are suitable/desirable or is it possible that you could be looking for another year or two before another house that meets your criteria comes to market.

    And of course, nothing to stop you starting with an offer of 300K and see where that leads.....


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    #55
    Damie
    Registered Users Posts: 341 ✭✭Damie


    Ray Palmer wrote: »
    What are you on about? Just because of my own personal finances I don't claim to have any special knowledge. You are projecting what you feel about the current climate on to me in a very bizarre way.
    Negative equity is not a given as you don't know the size of the mortgage they are taking out. Indicating you don't understand the terminology.

    You are assuming a large amount on your ability to know the personal finances of the OP and the future. Somethings may be possible but the leaps and jumps tacked on after that are massive.

    They are separate arguments to the value of the property anyway.You are completely running amok and off the point of if the property is worth anything.

    I personally wouldn't buy now but the reasons you have stated are little overboard IMHO. Your view smacks of the views of people who said prices would keep going up.

    What are you on about? Projecting what? As for "...Your view smacks of the views of people who said prices would keep going up", dear god you couldn't be further from the truth.

    I'm not wasting anymore time on this because its obvious you can't read or just fail to understand basic logic. /endof


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    #56
    Mr. Loverman
    Closed Accounts Posts: 4,001 ✭✭✭Mr. Loverman


    I'm pretty sure Ray Palmer is an estate agent pretending to be a normal person.


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    #57
    Fozzie Bear
    Registered Users Posts: 1,178 ✭✭✭Fozzie Bear


    tuam_sham wrote: »
    Hi Everyone,
    I am currently thinking of buying a house that is for sale in Cregmore which is approx 9 miles from galway city center, 4 miles from new dublin motorway and less than 5 miles from athenry, claregalway and Oranmore. The +'s to this house are. Its a great location for me and my family, close to town but yet has a country feel.

    Is that house the one on the airport road Tuam Sham??

    I am in a similar position to you in that I am looking around this area/Claregalway/Oranmore too at houses. I am getting married next year and looking at settling down somewhere. How and ever we have been looking for over 3 years now and I have still not taken the plunge. For me prices are still off the wall and in my opinion 350 grand is waaay to much for Cregmore, even with the size of the house. I have seen prices fall by as much as 40% in this area since 2008 when I first started to research this and watch things. Can you honestly see this changing or prices not continuing to fall? You should read the threads on here and propertypin.com too and think long and hard about it.

    I know its exciting, the thoughts of a new home and the missus is probably all gung ho about buying now, now, now (if she is anything like mine) but you need to keep a cool head. Do loads of research, ask peoples advice and think long and hard about it. It would be such a kick in the balls to buy now and 2 years down the line be in negative equity, with huge monthly repayments and thinking if only I had waited.....


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    #58
    BronsonTB
    Registered Users Posts: 1,893 ✭✭✭BronsonTB


    Fozzie Bear wrote: »
    You should read the threads on here and propertypin.com too and think long and hard about it......

    Do I presume you ment thepropertytypin.com as that other one points to a dodgy advertising site...

    www.sligowhiplash.com - 3rd & 4th Aug '24 (Tickets on sale now!)



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    #59
    KindOfIrish
    Registered Users Posts: 454 ✭✭KindOfIrish


    Mr. Loverman wrote: »
    Remember Galway has less than 250k people living there, which is tiny compared to most cities
    it is 75K actually. and it is tiny compare to most towns (outside Ireland);)


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    #60
    ZYX
    Registered Users Posts: 882 ✭✭✭ZYX


    Damie wrote: »
    What are you on about? Projecting what? As for "...Your view smacks of the views of people who said prices would keep going up", dear god you couldn't be further from the truth.

    I'm not wasting anymore time on this because its obvious you can't read or just fail to understand basic logic. /endof

    Your lack of understanding is obvious for the rest of us to see even if you cannot see it yourself.

    His point about thus property is you don't know how much it is worth. Yes the property Market in general may be about to go down but clearly not every property will drop the same.

    By your logic, if I buy a house today for €350k it will drop in price. If I instead pay €35k for the same house it will still drop. That is the point he is making. You need to know what a reasonable price to pay is.

    On the mortgage front you say this house will cost €800k. Now how much will it cost to rent this property for the ext 80 years or what ever?


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    #61
    dan_d
    Closed Accounts Posts: 2,819 ✭✭✭dan_d


    The thing is that "reasonable" is all relative.

    I try to think about it this way - when my parents bought a house in the 80's, they both worked. My mum's salary wasn't counted, as she was a woman (obviously!!) even though she's a teacher ie, permanent, pensionable job. At the time, nobody had anything. It was 25k, with interest rates of 14%.

    Is that "reasonable"?? No. But they needed somewhere to live. They literally hadn't anything...they only put a carpet down in a second bedroom right before I was born (me being the eldest). They had no kitchen utensils, nothing. I know they told me that friends of theirs bought a house around the same time, but had no money to buy a cooker or an oven, so for months had to have dinner in another friend's house.And these are all people who, nowadays, would be considered to have excellent jobs and big houses (as in 4 bed semi D's and detached) - teachers, pilots, engineers.

    The value of a house will go up and down. You could sit around forever waiting for a house price to bottom out. And there's still no guarantee against the fact that (a) it might still drop further or (b) interest rates might rise dramatically, causing you to have to pay way over the odds for it anyway.

    The best thing you can do is try and purchase so that you don't have to worry about these things. In other words look at what you're buying. Really look at it. The size, the number of bathrooms (I think I posted this all earlier!) , the neighbourhood, room for future kids, room for a second car, storage space, local schools, local shops, the garden...everything. Not just "oh it's really pretty and I love the fitted kitchen - I'll take it!!". See past the cosmetics and look at the practical!!The other thing you should do is (as many have suggested) make sure that you are not stretching yourself too much with the payments. The rule we used was....half our income (either individually or combined) was too much to be using for repayments. It had to be less than half - preferably a lot less.And we had a deposit. That was 3 years ago now, so we had less of a deposit than we'd have to have these days, but we still have a fairly hefty deposit.

    If you need somewhere to live, you can really afford it (including interest rate rises, paycuts and possible redundancy), it's a house you stay in for the next 30 years and you'd rather not rent - then use your common sense and go for it. Otherwise, keep on waiting. The housing market ain't going anywhere - it'll still be there when you decide to come back to it!


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