About to Buy - Getting Cold Feet!

Put a booking deposit on house about 2 months ago, just at the stage now where Engineer report is in everything is in order, next move is contracts to be signed however with all that has gone on especially in the last couple of weeks we feel uncertain whether buying now is the right move:

House €240k
House mortgage will be €200k
Putting down €40k
Both earn €60k combined annually

Taking into consideration income tax cuts, new property taxes etc should we hold off for another year or two… Anyone in the same boat…

We are entitled to our booking deposit back I’m sure, we’ll just have the cost of our Solicitor up to now… We really do not know what to do… have to decide in the next week…

Any advice/professional expertise greatly appreciated!

Anything on here is worth exactly what you paid for it.

Buy. Don’t Buy.

It’s your money. It’s you life.

It’s your decision.

Other than that… carry on.

Only one who is insane would be buying now!! If you go through with it, then you need locked up in a rubber room for your own safety!

The storm that is coming towards this country is beyond anything imaginable. The country is bankrupt, and is now being dictated to on fiscal policy. Whether it is right or wrong, the IMF etc. follow a simple play book: cut spending, cut public service workers, increase taxes, do what ever it takes to get the budget under control. They are now running the country. Everything they do, and the state of the banking sector means that property prices are only going one way. And to be honest, with the way things are going, in a year or two, property prices may be the least of ones worries.

Actually, the last thing that you want is an expert, or some one like me to tell you what to do.
Don’t believe me or anyone else, but go around the country and just really look at the place. There are empty buildings to let/sale everywhere! In what one would refer to as the nice parts of Dublin, every other building seems to be up for sale. There are deserted housing estates littered through out the country/cities. Take a look at google street view of the empty ghost estates, every where one looks in the country is full of empty buildings. Just LOOK at the place.

Take a look at a basic risk/reward of what might happen over the next two years:
Case 1: you don’t buy, worst/most optimistic case scenario, you rent for a couple of years and then you are able to buy the same place at a similar price to now. How would you feel? A bit silly for not having bought a little earlier, wasted a little money on rent ?
Case 2: You do buy now and what I and most people on this site think is about to happen, happens. Property drops another 50%, property taxes come in, all other taxes rise. You are in massive negative equity. Think how would you feel if this scenario happens?

I know quite a few people who bought in the last couple of years. They though they were getting a good deal, 15,20,30 % off the peak price. They all deeply regret it now. How do you think they will feel in a few years time?

But if you really want to XX yourself, go on. Just don’t come back in a year or two wishing that you had done something different.

Thanks Curious One, I get it alright things are so uncertain & really not good… it’s speculating whether house prices will fall as much as we think they will… On the other hand is our money safe in any financial institution for the next week let alone few year’s… This really has been an exceptional week the timing couldn’t be worse for having to make a decision like this, I guess we’re in the better position in that we have a choice right now… Any idea how long one can stretch out the process of signing contracts! For your info the house we’ve paid the booking deposit on is down €120k on peak… Decisions bloody decisions!

The Curious One was kind enough to answer your question, most people these days think exactly the above but won’t even answer any more. Some weeks ago this type of thread would have sparked tens of answers now everybody is going to think you’re so mad to even consider it it’s not even worth replying. I am one of them by the way. Have you noticed there aren’t even any “what’s it worth” threads any more?

Word in the street is that estate agents are getting very good at solitaire

A lot of properties have fallen effectively by at least 50% from peak prices, perhaps not the advertised price but certainly the one being paid at the end, at least the properties that are (were) actually selling (NOTHING is selling right now). A lot of people here believe prices will ultimately fall by 70 to 75% from peak. Nobody can tell for sure the exact percentage but what even my 4-year-old knows is that the price falls haven’t stopped just yet, not by a long stretch

When we bought our first house in Ireland in 1992 we where making a combined IRP53k (maybe more -can’t remeber), and our mortagage was IRP62.5k. We struggled to get the mortgage (and I was Public Sector, missus was in an insurance company, young educated and on a serious career path)

That was the standard then, I dont see whats changed.

Dont buy.

Your feet should be in blocks of ice at the moment.

The current situation is very uncertain indeed. In certain fields of management theory there is a simple tool to help deal with uncertain situations, and to try to plan for uncertainties.

The way it is done is to list out all possible scenarios. Don’t think at this point what you think will happen, but only think of possibilities.
In the next two years the possibilities that can happen are as follow:

1 Things get sorted out, banks start working properly, property prices stabilize or even rise slightly.
2 Things get slightly worse, but not too bad. Further 10% drop in prices. Some tax rises.
3 Things get a lot worse. 30 % drop in property. Large increases in taxes, unemployment. Some bank failures.
4 Complete collapse. 50% drop in property. Massive increases in taxes, unemployment. All bank failures, but deposits still safe
5 Catastrophic collapse. Complete banking failure. Loss of banking deposits. Who cares about property prices at this point.

Next step is to try to come up with some probabilities of each of these happening. I would give the following numbers.

1 - 5%
2 - 15%
3 - 25%
4 - 40%
5 - 15%

These numbers are little more than educated guess work, I admit. I can’t really see any other situations happening over the next two years. So personally I am planning my future on something like case 3 or 4 happening. But to take care of case 5, I’ve got a few gold sovereigns and silver shilling about in a safe place. The chances they will be needed is small, but it is only a small investment which could make life significantly easier under a catastrophic collapse scenario.

The normal affordability ratios for decades were 2.5 times the main earner, plus 1.5 times the smaller one. That would make yours about 40x2.5 + 20x1.5 = 130k. This is the maximum amount you should be willing to borrow - because it is the maximum amount you can realistically afford to repay. And this is assuming that your wages will magically not fall over the next few years - when Armageddon is about to hit everyone else on the island.

Assuming wages fall by 25% across the board (and this is very conservative IMHO) then the maximum amount you should be borrowing should be about 100k. This applies to you, and it applies to everyone on your income level.

So the conclusion is to wait until the price drops to €100k before you consider buying.

go to page 3,look for “would you sign contracts for house purchase on fri”,give you a feel of what others think.personally i would’nt, things far too uncertain and not likely to change any time soon.if you don’t mind me saying,your repayments seem to be very tight for your income.

You know its your patriot duty to buy not 1 house by as many as you can.

https://www.youtube.com/watch?v=0HtyF0jux2Q

The wife is over my shoulder telling me to stop being a sarcastic fxxx…

Prices have fallen by about 50% so far. Of course, this house may be special in some way but, if it isn’t, you should not pay more than 50% of the peak price. You say the agreed price is €240,000, €120,000 less than the peak price. Therefore, if the peak price was €360,000, you shouldn’t pay more than €180,000 (and there are many who would say that this is still too much).

I suggest you go back to the vendors and tell them the truth about your concerns. If they don’t knock a large lump off the price, walk away.

Go back and read every post written here by jmc, then make up your mind.

tell your estate agent that you were not fully mortgage approved, and the banks will not give you the full amount as they are taking everything into account coming down the line, and you want re-negoiate the price your well within yours rights and have nothing to lose

btw i wouldnt tell the vendor of your circumstances they are not on your side and there job is to extract as much cash from you as possible