Buy now or wait for sanity to return to the market?

psheaser · 09-05-2016 6:19pm #1

Just wondering if there's anyone who frequents these threads that is planning on waiting it out before jumping the gun and buying property this year.

It seems alot of people are getting carried away atm, work colleagues, family etc have been talking and borrowing like it's going out of fashion, history seems to have a funny way of repeating itself.

Given the rather unstable global economic outlook, possible brexit among a host of other reasons, one would think it would be sheer insanity to borrow easy credit to purchase over priced low quality property that the current market is offering?

A crash could very well happen ( negative nelly) and all the signs are showing, shades of celtic tiger all over again.

Personally i'm renting (house share) atm but have managed to save up 95k deposit ( 29 years old) and eager to get my own place but it would kill me to pay such a huge amount of money( life savings along with over 120k mortgage ) on such poor quality stock that's going around right now.

What's your plan people are you planning on buying as soon as you get into the position to do so? or will you wait it out ?

mahoganygas · 09-05-2016 6:31pm

I'm saving like crazy at the moment. But I have no plans to buy in the next 12 months. The market is way too unstable and I have no confidence that current prices are not inflated.

I've no chance but to keep on renting and hope that some degree of normality returns to the market. As much as it pains me to fork out rent every month for somebody else's mortgage, i'm in no hurry to pull the trigger on a mortgage. Particularly with so many risks on the horizon: unstable government, lack of supply, erratic Dublin prices, brexit, weak banks, eurozone crisis.

Anybody who justifies getting a mortgage just to "get on the ladder" should be taken out and shot.

athtrasna · 09-05-2016 7:03pm

Don't forget supply and demand. Prices won't drop much if at all in areas where demand outstrips supply. We're building nowhere near enough new houses at the moment and have a growing population.

El_Dangeroso · 09-05-2016 7:05pm

Welcome to me 4 years ago.

Well, I never really found anything I loved but I was convinced catastrophe was around the corner.

Now I'm in a position to buy and have no intention of trying to time the market.

Ya prices could go down, but in the time scale of 10-15 years it's not likely to be in negative equity and that's how long I plan on keeping this house.

So just gonna buy, be sensible, have a big deposit, get the lowest interest rate I can and hope for the best.

The market is not going to be magically stable next year or the year after that. If you're waiting for a stable market, you might be waiting decades.

andekwarhola · 09-05-2016 7:08pm

People always talk about 'sanity returning to housing markets' as if there's some guaranteed magical time in the future that we'll all be able to buy cheap houses in a handful of desirable Dublin postcodes.

Good luck with that.

psheaser · 09-05-2016 7:28pm

Doesn't have to be very desirable, you'd atleast expect something reasonable for handing over quarter of a million hard earned euros.

Also you seem to be missing the point, all it takes is a minor raise in interest rates, a slight dip in China's markets and another recession is around the corner albeit not as severe as 2008 but a recession none the less which would certainly lead to reduced house prices over a 2-3 year period.

April 73 · 09-05-2016 7:42pm

Unless you have a crystal ball it's impossible to time the market. If it's a house you will be in for a long time you will several rises & falls in property prices over the decades. It's all cyclical.

psheaser · 09-05-2016 8:04pm

What's the worst that could happen ?

tuisginideach · 09-05-2016 8:47pm

psheaser wrote: »

Personally i'm renting (house share) atm but have managed to save up 95k deposit ( 29 years old) and eager to get my own place but it would kill me to pay such a huge amount of money( life savings along with over 120k mortgage ) on such poor quality stock that's going around right now.

What's your plan people are you planning on buying as soon as you get into the position to do so? or will you wait it out ?

95K deposit? Saved while renting at 29??????????

highly1111 · 09-05-2016 8:50pm

All the speculation is really unnecessary unless you're planning to flip it again in a few years. Myself and my husband finally sold an apartment in south Dublin after battering down the mortgage and riding the negative equity wave. However we had to rent for 5 years as when i was pregnant with number 2, we just ran out of space. So now we have our deposit again, we're buying. In the 5 years we've been renting we've had to move 3 times due to houses been in an unfit state and the landlord selling. We're closing the contract on our "forever home" next week and I cannot wait. I don't care if it rises or falls in value because we've no intention of selling it - so every Joe bloggs speculator and commentator (and economist apparently!!) can pontificate away. We bit the bullet because the alternative creates even more uncertainty.

Wesser · 09-05-2016 8:50pm

I think the debate about the market is very valid. But the problem is that people have lives and their lives are happening now. If you want kids for example you might wAnt your own place and not up be at the whim of a landlord. Buy because you want to live in a place and you love it and can afford it. Not because it is an investment that may or may not pay back. A house is for living in not making money out of.

yqtwqxqm · 09-05-2016 8:52pm

I think the only way house prices are going to fall in Dublin is if we have another major recession.
Just as in the last one, cheap houses are no use if you are afraid to by them or unable to buy because you have no job.

psheaser · 09-05-2016 8:59pm

I recommend people put away as much as they can within reason, as then they won't be at the mercy of the banks and will be able to capitalise on the next inevitable downturn.

Just my two cents

Barely Hedged · 09-05-2016 10:01pm

psheaser wrote: »

Doesn't have to be very desirable, you'd atleast expect something reasonable for handing over quarter of a million hard earned euros.

Also you seem to be missing the point, all it takes is a minor raise in interest rates, a slight dip in China's markets and another recession is around the corner albeit not as severe as 2008 but a recession none the less which would certainly lead to reduced house prices over a 2-3 year period.

Define what's reasonable? Build, size postcode?

Minor rise in interest rates??? Care to inform yourself as to how much you could get a mortgage at when base rates and EURIBOR were around 5%?

What happens if we have hyperinflation? Government allows interest payments to be offset against tax to keep the debt bubble at bay.

09-05-2016 10:17pm

Hoping to buy as soon as possible before prices get crazy altogether.

That said people talk about sanity, realistically prices were unrealistically low over the last few years and anyone lucky enough to have the funds to buy then are laughing. It's very hard to see prices drop to those levels again as even though people are trying to claim things are like before and people are buying like in the Celtic tiger it's very different now.

Banks are not lending very easily, people have bigger deposits (or at least have a deposit unlike with 100% mortgages), prices are still well below the height of the boom but are climbing and one of the biggest differences of all is there is no supply.

09-05-2016 11:28pm

I rented all throughout the ' mad' years. People told me over & over again that I should buy, even miles away from Dublin!
I didn't because I didn't want to live miles away. So I waited & eventually I bought, somewhere I wanted to live.
I'm selling now because I want to live somewhere else.
I wouldn't buy a home based on selling in a few years, I would only buy where I wanted to live.
If that's what you do OP then you can't loose.

2rkehij30qtza5 · 09-05-2016 11:38pm

highly1111 wrote: »

All the speculation is really unnecessary unless you're planning to flip it again in a few years. Myself and my husband finally sold an apartment in south Dublin after battering down the mortgage and riding the negative equity wave. However we had to rent for 5 years as when i was pregnant with number 2, we just ran out of space. So now we have our deposit again, we're buying. In the 5 years we've been renting we've had to move 3 times due to houses been in an unfit state and the landlord selling. We're closing the contract on our "forever home" next week and I cannot wait. I don't care if it rises or falls in value because we've no intention of selling it - so every Joe bloggs speculator and commentator (and economist apparently!!) can pontificate away. We bit the bullet because the alternative creates even more uncertainty.

Couldn't agree more with you. Well done and every best wish in your new home. Good to hear a positive story from someone who struggled through the recession and endured the tumultuous rental market. It doesn't matter if your forever home fluctuates in value..it's irrelevant as you are buying it to live in longterm. The best of luck.

newacc2015 · 09-05-2016 11:46pm

psheaser wrote: »

Doesn't have to be very desirable, you'd atleast expect something reasonable for handing over quarter of a million hard earned euros.

Also you seem to be missing the point, all it takes is a minor raise in interest rates, a slight dip in China's markets and another recession is around the corner albeit not as severe as 2008 but a recession none the less which would certainly lead to reduced house prices over a 2-3 year period.

Actually an analyst looked at the US house prices over well 60 years ( I think it was Robert Schiller). He found interest rates and land prices had little to do with house prices. Look at the 1980's, where people were buying houses with mortgage rates well over 20%.

China has little or no impact on our economy. We export hardly anything to do. Interest rates can only go down for the next 5 years. The ECB is too afraid to damage growth with upping rates.

IMO the best indicator of 'value' in the Irish market is rent. When you can buy an apartment for €120k or rent it for €1200 a month. You have to ask yourself, will the property go down much even in a recession? No as even with the rent falling slightly, the yield on the apartment is massive

IMO it doesnt make sense to buy certain properties eg I know someone letting a 4 bed house for €2200 a month. If that house was to sell tomorrow, it would sell for €750k-800k. But if you can rent a 1 bed for €1200 a month or buy it for €120k. It makes sense to buy the apartment

astrofool · 10-05-2016 1:05am

Barely Hedged wrote: »

Define what's reasonable? Build, size postcode?

Minor rise in interest rates??? Care to inform yourself as to how much you could get a mortgage at when base rates and EURIBOR were around 5%?

What happens if we have hyperinflation? Government allows interest payments to be offset against tax to keep the debt bubble at bay.

If the crash has taught anything it's that government and bank policy will adjust to keep debt on an even keel. If rates rise that high, I'm guessing there will be a new form of TRS to keep the repayments affordable. Wages will also be going up to adjust.

In the event of hyperinflation, better to be living in an asset they can't get you out of then money in the bank.

Idbatterim · 10-05-2016 1:33am

andekwarhola wrote: »

People always talk about 'sanity returning to housing markets' as if there's some guaranteed magical time in the future that we'll all be able to buy cheap houses in a handful of desirable Dublin postcodes.

Good luck with that.

I think prices overshot on way down alright. Dublins fundamental are so strong that after the sky didn't fall down this time and I can't see people having too much fear a second time round, when they saw how quick the rebound was this time...

There are so many factors to be taken into account though. One thing is good for sure, the central bank sAys it doesn't intend on changing mortgage criteria. That means the snakes who have just gone into power will have to focus more on costs than simply bumping cost of new housing onto mortgage holders through more debt ...

Idbatterim · 10-05-2016 1:38am

psheaser wrote: »

Doesn't have to be very desirable, you'd atleast expect something reasonable for handing over quarter of a million hard earned euros.

Also you seem to be missing the point, all it takes is a minor raise in interest rates, a slight dip in China's markets and another recession is around the corner albeit not as severe as 2008 but a recession none the less which would certainly lead to reduced house prices over a 2-3 year period.

I agree. But I don't think we are at an extreme now price wise. Obviously prices were a total joke during boom and probably overshot on way down , so currently we are in a middle ground I reckon... Is it the best time to buy? No that was a few years ago if you were in the position too. But have you have to go on the here and now...

mariaalice · 10-05-2016 9:11am

I worked with someone in 1998 who at that time was holding off buying until sanity returned to the market, you can guess how that worked out for them.

psheaser · 10-05-2016 12:29pm

The sense of scarcity and urgency in some of these posts to get on the property ladder is unreal.

Have we as a nation learned nothing over the past 10 years?

Lambs to the slaughter.

Barely Hedged · 10-05-2016 12:35pm

psheaser wrote: »

The sense of scarcity and urgency in some of these posts to get on the property ladder is unreal.

Have we as a nation learned nothing over the past 10 years?

Lambs to the slaughter.

Impart your wisdom so with a real life example.

Provide a link to a property that you would like to buy but you consider it all that is wrong with the current market and tell us how much you would pay for it and why.

Graham · 10-05-2016 12:36pm

psheaser wrote: »

The sense of scarcity

It is not a 'sense of scarcity' there is genuine scarcity in the current market. As a nation we are not building enough houses to meet demand, as has been the case for the last few years. For as long as this continues, prices will continue to rise all be it at a rate tempered by the availability of, and access to finance.

Barely Hedged · 10-05-2016 12:56pm

psheaser wrote: »

I recommend people put away as much as they can within reason, as then they won't be at the mercy of the banks and will be able to capitalise on the next inevitable downturn.

Just my two cents

How much will the downturn impact house prices by, when will it be and is a downturn the only way to make gains in an investment/property?

Villa05 · 10-05-2016 1:55pm

Barely Hedged wrote:

How much will the downturn impact house prices by, when will it be and is a downturn the only way to make gains in an investment/property?

BH I belive you are intelligent enough to understand that price bubbles are not only created by bad lending practices, they can also be created by restricting supply which is currently happening

frankythefish · 10-05-2016 1:58pm

psheaser I think you are a little naive. House prices going to decrease? http://www.independent.ie/business/irish/house-prices-rise-again-in-march-but-dublin-is-the-driver-34660529.html
Grab a comfy chair you may be waiting a while.

KomradeBishop · 10-05-2016 2:07pm

Until stuff like this is sorted out - don't expect a drop in prices:
"Only 75 local authority houses were built in 2015 - the worst year on record"
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http://www.thejournal.ie/64-local-authority-social-housing-houses-built-in-2015-alan-kelly-2747473-May2016/

We need a huge boost in public housing funding, to start eating into the shortfall - high house/rental prices are a government policy decision, not a fluke of 'the market'.

Jet Black · 10-05-2016 2:07pm

I bought my first house this year, got the keys last week and what's happening in the world didn't factor my decision at all. I had the money and I wanted a home to do me for at least the next ten years. There's always something going on with the markets. Greece were to exit the euro, Spain had no money, Cyprus closing banks. The doom and gloom will never go away.

Walter H Price · 10-05-2016 2:24pm

We've been saving a fair bit for the last 12 months have about €28k there now but there's zero value in Dublin like a be struggling to get a 3 bed in a decent suburb for under 300k. Our landlords just agreed too a two year lease with no rent increase so we're going to take that keep saving get married next year and see what the markets like in 2018.

Buy now or wait for sanity to return to the market?

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