What to do, What to do????

Hi all,

As you can see from my number of posts, I am a long time reader first time poster. I have been reading and watching this forum since January of last year (when I began to save a deposit for a house). I have always been in total agreement with the general consensus on this site re: house prices/Government/Tom Parlon etc etc.

My situation, I have saved (with my girlfriend) a considerable lump sum now which would easily be 10% of the average 3 bed semi in Dublin now. I have also seen some considerable drops in property prices in areas that we are looking to settle in. My thoughts would be that prices, in certain areas are back to 2002/2003. I do believe that they SHOULD drop further to stop young couples like us writing off the next 35 years of our lives in debt.

My worries, I have seen/viewed some houses that I like, and my girlfriend loves, that have fallen in price. I do expect them to continue to fall more but I am very concerned of the pig ignorance in Ireland to reduce prices (thinking dropping 10k off half a mill is a bargain) and the great lengths that the government seem to go to to ensure the prices dont fall further, NAMA etc. I am also aware of the masses of people waiting, that will consider a price drop of 25% to be amazing and buy which will inevitably spur our media into a frenzy of the property bubble phoenix from the flame.

So my question, waiting for another 6 months or so, while the prices continue to fall and NAMA is still in its infancy, is it a time to even consider buying or am i talking crazy. Im not sure if I am the typical FTB in wait but this is what is going on in my head at the current moment.

Any help/comments welcome. Cheers

You are typical.

I’m also reminded me of this quote…

You will find a position half way between what Crashandburn tells you and what The Welcome Guest tells you .

There it shall settle . Meanwhile build up some savings with a bank that is somewhat likely to give you a mortgage , aib boi ebs permo are all vague possibilities …and sure why not spread your savings among 2 of them .

Only a lunatic will buy this year and I am not a bit sorry for any of them .

Might be something to add…

Ive been pre-approved (just recently) for a ludicrous multiple of my our combined salaried by AIB. 6.9 times our combined salary

Wait for the IMF :blush:

therefore you are seen as a good risk, likely in a state job.

you will therefore be a good risk in 2010 , spend the next year researching hard .

So long as you need to get into 35 years of debt to buy that’s the sign to stay out of the Irish market.

25 years should be your absolute maximum. That’s a difference of 10 years of working for the bank.

Right now OP, do nothing! Save, view a few houses in areas you would like to live in, find out about local schools and amenities in those areas etc. But overall do nothing this year. There will be a very different outlook after we have the next shall I say real budget close to year end and then you like the rest of the country can start planning what to do. House prices have only one way to go for a long time yet.

Thanks for the opinions, most were helpful (apart from TUG),

I did say in my initial post that I intend waiting for another 6 months (rest of 2009) to see how things run, again, my worry is the goverment and their strange ways! If the country is still in an awful state, then i presume my decision will be made easier! Again, cheers for the opinions!

You will find, in the long run, mine was the most useful advice and reminder. :wink:

Work out your take-home based on a reduction of 30% from last years levels (through tax &c). Look at paying a mortgage rate of 5% in the next few years. Factor in a property tax and water rates (although the 30% should cover it).

I’m not predicting that these things will happen, just that they are outside possibilities. A stress test like that will give you the comfort of knowing that you can afford the mortgage even if it means living on rice and beans! The government is going to be taking a lot more money out of people’s pockets in the next two budgets (assuming FF last that long).

Any government will do this, it doesn’t matter if it’s FF or not.

The Banks new lending policies have left many of the masses on the sidelines, so I would not be worried about this (80% of mortgage applications refused)

This is the big worry for me, With NAMA, One single agency has the power to potentially control supply and the government has stated that NAMA is a long term project.

irishtimes.com/newspaper/finance/2009/0327/1224243553357.html

**Quote:
and the great lengths that the government seem to go to to ensure the prices dont fall further, NAMA etc.

This is the big worry for me, With NAMA, One single agency has the power to potentially control supply and the government has stated that NAMA is a long term project. **

Even if NAMA gets off the ground, how is it sustainable. How can a bankrupt country continue to prop up its property/land values.
Unemployment rising,taxes rising,total tax receipts for the govt falling…etc
If people want to make a 25/35 year investment decision on a fear of a price fixing cartel,we have no hope.

A different government might look at the expenditure more than the income side of the equation. That’s a risk people on public sector or PS dependent salaries should consider also.

I see lots of people posting about how they’re in “secure employment” or have a “secure salary”. There isn’t a single person in this country in secure employment right now.

I think you’ve said it yourself. That a young couple should have to both tie themselves to 35 years of debt is crazy and is only a relatively recent phenomenon as a result of insane bubble prices. So prices are falling and will continue to fall.

The question you seem to be asking is by how much they will fall and for how long, and you’re into crystal ball territory when it comes to accurate predictions. However, for what it’s worth, I’m quite convinced that we will see significant further price drops (in the region of 40 - 50 percent on average) over a period of at the very minimum two more years.

I wouldn’t worry about people jumping back in and buying properties in 6 months or so because of perceived value. At most this might lead to a dead cat price bounce but supply is too high, prices too exhorbitant, and economic conditions too dreadful for such an effect to be prolongued.

However the great unknown is NAMA and whether it will purchase enough supply at inflated prices (which we as taxpayers pay for) that puts an artificial floor on prices. This is a fear for me as nobody seems to know at present how NAMA will operate. It is something that will need to be scrutinised carefully and on the pin is probably the best place to do so in my opinion.

Martin Foley (aka The Viper)?

That was implied in what I said. Irrespective of how it’s done, there’s alot more money to come out of taxpayers pockets to come, by hook or by crook.

You are of course, familiar with the law of diminishing returns, that goes without saying… :unamused:

I don’t regard NAMA as a vehicle to ensure prices don’t fall further.
Quite the opposite - if NAMA gets going quickly (a big if) and prices properties at say inflation adjusted 1996 levels then it will kick start the property market again.
Saving us several years of f*ck all transactions occurring and putting us out of our misery.
Don’t know why everyone is assuming the opposite.

Don’t forget the masses of people in NE.
This was an 11 year bubble probably unprecedented in its extent.
It’s an accident of birth - while those born in the 80’s are now in clover, the poor souls born in the 70’s are now (probably) in the sh*ts.
The rules of the game have been changed (and are still changing) radically half way through the game.

What I can’t get my head around is this:

If NAMA puts an artificial floor on houses prices at the same time as the government are taking back incentives (mortgage relief for example), along with the accepted consensus of more taxes and the likely-hood of property/water tax, add to that the banks aren’t lending money - who can buy the houses?