Thanks! Your comments were very helpful!
biggest question is will you want to live there for 10 years. Good reasoning though. 10 years is a good window. Include the transaction costs also. If you buy now you are catching a falling knife. the foreign banks are gone, you won’t get a tracker and the irish banks will soon be charging usurous rates.
On the other hand if you wait, you will see good value as prices usually undershoot their real value.
Did I miss the part where you state the actual price?
You’ve left out loads of details. Like the asking price. If you want advice on the economics of this may I suggest you make a factual list of the property’s attributes. A link to an ad would be ideal. “very good street” etc. is of no help in evaluating.
Whilst prices are going down mortgage rates are going up, interest relief abolished from July 2011…so in terms of affordability things may not alter significantly from now on…(speculation obviously)
I’m probably similar to many people at the moment…in that whilst I know waiting may be the best option in terms of striking whilst at the floor (or below) I find it hard to believe that things will ever return to 4Xincome in terms of mortgage approvals.
1050(hopeful) X 12 (months-realistic=11) x 19 (return of 5.2%…it is not a true investment property but is bought to live in - to rent only if become unemployed etc)
950 (conservative) x 11 (standard) x 16 (6.25% return - but not expecting this see above)
I am not giving exact pricing as I want people to give their opinion as regards the reasoning and what they would think represents a ‘fair value’ (if that exists). Also I know there are transaction costs etc but forget these in order to keep it simplistic.
I have been watching the market for two years. My own personal opinion is that there are many places where prices will continue to fall for some considerable time. However I expect that prices at the ftb level in certain places ie. sought after city centre and southside locations and on houses only will likely settle about 10% lower than current values. Apartments are the obvious area where even more pain will be encountered…
Or I could be engaging in trite and useless wishful thinking…
Using any criteria, including delusion, this house is grossly overpriced. If you buy it you will live to regret your decision.
The knife is still falling indeed.
You will quickly outgrow a 2 bedder.
10 years is too long a horizon. Its pedantic, I know, but 8 years is about as far as you can guess.
Three years is what a realist would work on.
1000**weekly* rent is a good valuation.
It really is a lovely house on a lovely street though. Personally, I think that in the future, houses like these will be at quite a premium to houses with PVC windows, cheap brickwork, situated in suburban housing estates or new developments etc.
That said, you have to get a feel for the risk of the financial obligation you’re undertaking. Sure, there’s a possibility that in a year or five, the market will be reflated, and/or debt will be inflated away. On the other hand, there’s even more of a distinct possibility that things will not be quite so benign and severe hardship could be experienced.
From experience, if you look carefully and have good references, you could find a place like that house you’re looking at - that has the timber windows and fittings, professionally painted (rather than layers of gloss), well set out with light and space inside, on one of those gems of streets you get here and there in Dublin. For a place like that, I would say you could get it for around 1200 euro in the current rental market (with much nicer furnishings and fittings and finishings than what you’re looking at).
Sure, there’s always the possibility that you could miss out - who knows what’s around the corner tomorrow. But, the probability is on the side of things getting much worse. Why risk your future mental health and peace for the sake of… what?
The ‘to live in’ argument is a personal one. If I really wanted something, not as an investment, but something to have, own, consume etc. then the investment angle is irrelevant. In such cases, it’s “I work hard and I want to enjoy my money”. I owned a ridiculously expensive but very nice Acura once (honda version of Lexus). It made absolutely no economic sense, but I enjoyed the car immensely.
EUR1000 x 11 / 0.08 = 123,750. Or lets be generous, EUR1100 x 12 / 0.05 = 264,000. I’m plucking numbers out of my ass, but you can see that EUR300k is too much. However, if you really want it, can put down a large deposit, can hammer down the debt with a secure job, tolerate much higher interest rates, then go for it
I wonder what the BER rating is. Sash windows aren’t cheap to double glaze.
The cheapest kind would be a false one that opens outward but if you choose a sliding sash they are very very expensive. Ring up Fairco for a quote, Rolls Royce wiindows, Rolls Royce prices.
Is the loo accessed through the back yard? Also, the tiny kitchen will do your head in after a while.
You’re not an idiot but I also fail to understand why you want us to convince you it’s a bad deal… You’ve framed it as if you’re not comfortable with the prospect yourself or are setting yourself up behind a large stone parapet waiting to pour boiling oil on any contributions that don’t chime with your desires…
All I’ll say is you’ll incur an awful lot of costs owning that you won’t renting over that ten year period, personally, I would not make the move based on a ten year prognosis, some people probably jumped in in Japan on that basis and eighteen years later prices were still coming down.
Only move if you’ve got the space required for future eventualities, reasonable job security and know the area, like it.
If interest relief goes, then houses at current prices will become less affordable. Ditto for interest rate rises. This will cause downward pressure on house prices since historically, residential property correlates well with affordability and access to cheap credit.
That’s your dilemna: pay over the odds now using artificially low credit terms. You get a benefit over the first few years - or as long as you fix you mortgage rate. Then you’re in the same boat as everyone else, having initially paid over the odds for your house. The only thing that could save you is if credit suddenly became easy to get once more. The mistake you’re making is looking at a long-term investment using short-term criteria.
The reason Ireland will not go all-out Japanese is because our interest rates have nothing to do with our economy - they are entirely dependent on French and German economic conditions. So we’ll never see twenty years of virtually zero interest rates. Instead we’ll have gouging banks charging juicy premia on ECB rates in order to survive, but in all other respects we’ll imitate Japanese-style deflation and depression.
The best time to invest in property is when property yields are high, interest rates are high, the economy is on its knees, and credit is hard to get. The two most crucial elements are currently missing. It is a lot more likely that we’ll see the first two before the last two, imo.
True dat. In historical terms anyway!
Surely we already have the last two (the economy is on its knees, and credit is hard to get) !
Getting there but a case of the Fianna Fails really…
Alot done, more to do!
Yep, I meant to write “before the last two recover”.
Sceptic, presumably the final 3 of those conditions are good because they dampen demand and thus prices?