I just can’t get my head around the dead cat bounce threads etc.
The economics are just beyond me. You could point out that I should educate myself and you’d be right or you can tell me whether it is a good of bad time to spend this sort of money on a place in Dublin.
Personally I wouldn’t (on the contrary actually, I have sold up). Unless of course I had a cool €10 mill in the bank and I didn’t mind overpaying for a house. Seriously though, no one can really advise you on what to do. Everyone has an opinion on what will happen and it is up to you to make yours. Most people who already own are sure that prices will keep rising, while most people who don’t tend to believe that prices will fall. At the end of the day it will come down to your circumstances, children, job situation etc.
You will have to decide for yourself because you will have to live with it. Personally, if I was looking for a house to live in myself in Dublin I would buy. I would never be happy about missing out on 2012 but in the end I think those prices won’t be around again for a loooooong time. Even if prices in Dublin somehow reduce in about 5 years from now a) I will not have thrown away 5 years of rent, b) I don’t expect them to go lower than they were in 2014, let alone reach 2012 again c) I will have five years of not obsessing about property prices. That’s just me though, I won’t really start worrying about Dublin property prices until they are much closer to celtic tiger highs. Like 80% of 2006 prices would make me feel a bit wobbly. These prices don’t make me feel too nervous, what with supply the way it is for the foreseeable future. Of course we could be hit by an asteroid.
Up, up and away for at least another two or three years and after that its anyone’s guess IMHO. if I wanted to make a quick buck and had some spare cash I reckon a punt of property in Dublin is a pretty good bet.
Negative equity presumably?
Otherwise presumably both those would be decent revenue producing assets on a yield- cost basis and would be worth holding on to unless the bank wouldn’t allow you to keep them both.
My advice — buy. Property in the price bracket you are working with has risen less than the starter type properties.
If you want to really change your life circumstances ,and buying a home certainly falls into that category, you really have to make a decision yourself , nobody else is going to help you or play the part of your fairy godmother.
I think the real question for you, is not whether to buy this particular property, clearly you have a very good income to secure a 550k mortgage on one income (If I’m reading the information you gave correctly). Rather the question is how will you cope financially with any interest hikes in the future - 5 years +.
Two mortgages on trackers and a hefty mortgage on your PPR.
The cheapest variable (Mortgage calculator.ie) for 550k (650k less 15%) is 2,754 per month.
In 5 years with a 2% increase, you could see your payments increase to about 3,350 per month. That’s a hefty increase and then you have the other two mortgages to consider.
You should consider making an appointment with a financial adviser and look at all your options.
3 mortgaged properties is a lot of leveraged exposure to one asset class, let alone the concentration of Dublin residential property. “Property as pension” is another red flag. You’re ignoring well-established rules of investing by going down this route.
That aside, with 3 kids in a 2 bed, if you can current afford to live somewhere bigger then go for it. That’s a separate consideration from the rest.
Given the crappy yields for higher end property you could of course just rent a 3 bed and rent out the other two. Can you retain one as a PPR under those circumstances?
One PPR is a sensible investment for tax reasons, ignoring market timing issues (like buying in 2004-2007).
I would be quite surprised if interest rates rise significantly in the next 5 years. More likely in the other direction IMO.