Just wondering what your views are on where the market is heading in the next year. In a situation now where we need to make a decision as to whether to continue renting or will we take the plunge and buy now. Saw a few places recently that now look pretty affordable and in the area where we want to settle for good. How much further is the market going to fall. Rent costs me approx €14K per year - a fair whack off a mortgage.
Job wise, me and the better half are in permanent jobs that are very secure. Wage freezes in place at the moment and income will probably drop due to tax increases. We currently have a deposit of circa €80K and save approx €500 a month.
Heart wants to buy and get a place of our own now but head says wait another year. What do the pinsters think?
Markets are cyclical, prices will get as unbelievably low as they got unbelievably high, wait. I remember a post I read once on the pin somewhere that i never forgot, there are a lot of people in fancy houses that wish they were scrunched up in crappy, cheap bedsits ( not the exact words obviously)
Want to knock 5 years of your mortgage? Then wait another 1-2 years to buy. Be sure to ask again then though, as you may get the same answer.
And if you wait long enough and the economy takes a nosedive which is looking increasingly likely, then you may even buy the house you are looking for with cash, no mortgage, now that’s a life changing scenario that you seriously need to consider. To protect your wedge see here:
House prices will in my view continue to fall for another two or three years. I believe the final drop will be about 70% off peak. Prices are now down about 37% according to daft. Long way to go yet.
Wait and you will have the option be mortgage free and rent free for the rest of your life.
Think of what you could do with the 14k per year you will have freed up.
Despite the cuts made in the last budgets the state is still spending €20Billion a year more than it takes in, how long more do you think that that can be sustained?
The present government has only been kicking the can down the road and sooner or later the budget deficit is going to have to be addressed both by increased taxes and reduced spending, both measures will have to be harsh, much much harsher than what we have seen until now.
Whether these cuts are made of the governments own volition or are mandated by the EU as part of a rescue package remains to be seen.
As unpalatable as it may seem to those in the public service those cuts will IMO have to include widespread job cuts in the public service.
We will also see huge cuts in benefits and allowances such as the payment of mortgage interest which will effect all the unemployed.
I foresee a situation where we will have people out of work who will have no alternative but to sell up and emigrate and because of the financial situation there just won’t be buyers for the houses on the market.
Call me a doomer but that’s the way I see things going and it will be quite a few years before it is a sensible decision to buy.
How much is it to buy a property similar to what you are renting? Do you want to buy something similar to what you rent or do you need a bigger place for childer and such?
One way to estimate the value of property is the 12:20 rule if it is 12x annual rent (assuming you are not overpaying for rent and this price or similar could be reasonably achieved into the future) then it is a good time to buy; if it is 20x annual rent or more, don’t buy. In between is more of a gamble. Thus, if you could get a property for between 168k and 280k then it would make sense to at least consider buying. But the choice is up to you.
To buy at 280k (assuming youre a FTB, have furniture and not a refurb job) on a 20 year mortgage, you could borrow 201k and put 79k from savings (1k for legal and bank fees etc) you would pay 1,114pm approx initially (say 3%) but this could rise to 1,440 or more if rates went to 6%. They could go even higher, but equally they might never get that high.
But here’s the best part, if you buy at 164k (assuming youre a FTB, have furniture and not a refurb job), you could put 79k of your savings as a deposit, and borrow 95k at AIB’s 4.39% fixed rate. You would be paying 1,766 per month (which is not much more than your current rent +500pm saving) and after the 5 years you would own it outright. Of course, the bank probably wouldn’t give you a 5 year mortgage term, but you could ask.
So I’d say if you could get a place equal to or better than your current place for c. 200k, you intend to stay there long term and your jobs really are secure, then it wouldn’t be too bad an option.
However, the fact that you’ve come onto the property pin to get advice shows that you have doubts and if in doubt, leave it out, so to speak.
EDIT: Just saw you want DUblin 3/5 and a 3/4 bed. Give these guys a call - daft.ie/searchsale.daft?id=553113
Tell em johnnyskeleton sent you and you want to buy their house for 150k. If they say no then tell them you’ll be back next year, but your offer will not be as generous.
Property prices are still falling and there is every reason to believe that they still have some way to fall. I would advise that you should consider the wise rule of selling in a falling market and buying in a rising market. Thanks to the corruption and mismanagement of our political elite the Irish State now appears to be heading for bankruptcy and I would not be buying anything that would chain me to this failed state.
Funnily enough, my mum said the exact same thing to me this afternoon! It’s a fair point though, and just about the only reason why prices might in theory be higher now than in 1995.
But even allowing for that, surely psychology cannot possibly trump cold reality. People can set psychological floors all they like but if they can’t get mortgages and are being taxed more and having their wages cut, then surely that floor means nothing.