extopia said:I had a taxi driver recently boasting about his €900,000 mortgage. Made me a little queasy.
So presuming the prices continue to increase by approximately 8-10% for the next 2 years, that means that the house I want to buy, valued at around 500K at the moment will have increased to 605K, then a correction to the market (the polite term for a crash) of almost 20% is required to get back to the price I can pay now.While the housing market may continue to grow for the next two years what about the years after that. In two years time and at current borrowing rates we'll be carrying even more debt. What then if things go bad?
Glenbhoy said:The question for me is - do I purchase now (when interest rates are lower and bank lending criteria is a bit lower) or do I wait, because like many on here (on this thread anyway), I am highly dubious of the sustainability of the economy and housing market at current levels?
bearishbull said:even if prices do correct in 2,3,4 or more years they may not go much lower than the price you will pay now..
walk2dewater said:Based on what? The tune has changed noticeably in the last year, from "prices won't fall" to "if they fall it won't be by much". Prices have >tripled since 1997, who would have thought that in 1996? Current prices are purely psychologically driven and have no basis in economic returns; I cant remember the last time I saw a property in Dublin that had a positive real yield. In fact, is anyone paying attention to prices at all? €300k, €400k. €500k, who cares is the view, as long as the monthly committment can be met eh? We've climbed the 'wall of worry' and sent prices to the moon, sooner or later we'll face the 'slope of hope' as the market tops and turns, and psychologically the mood does a 180. Fear of being left out is replaced by fear of massive, bankrupting-sized, losses.
Interesting times indeed.
ivuernis said:I don't know how that man can sleep at night! But maybe he's working so many hours to pay the mortgage that he falls asleep the minute his head hits the pillow.
bearishbull said:maybe there should be a windfall tax on all the property developers who made many millions each from young people for doing little just buying land up and sitting on it till its rezoned or developed
bearishbull said:i said they MAY not go much lower which is possible given the high price(often irrational value )irish people place on owning a house.
if you have read my previous posts you will know i am very negative on future house prices but if your buying your own home to live in for next 20 years house price movements shouldnt be of too much concern to you.
if you can afford it and intend to live in it and dont lose your job(in a crash the wider economy would probably be affected and many jobs would be lost) you'll be fine,if house prices slump every house slumps and you can move to a cheaper house by selling your equally cheaper house.
walk2dewater said:The tune has changed noticeably in the last year, from "prices won't fall" to "if they fall it won't be by much".
...
Current prices are purely psychologically driven and have no basis in economic returns;
...
who cares is the view, as long as the monthly committment can be met eh? We've climbed the 'wall of worry' and sent prices to the moon, sooner or later we'll face the 'slope of hope' as the market tops and turns, and psychologically the mood does a 180. Fear of being left out is replaced by fear of massive, bankrupting-sized, losses.
I think that this is what everybody thought when we hit 2000 and turned the century. We all expected that the prices were going to at least stop if not go down a little. There was a serious lull in the market for a few months and then the maddness started all over again.walk2dewater said:Renting is a much better option to ride out this storm. Why buy now when you can save more and buy more later? I'd rather be liquid and have my money in non-property assets until this situation gets sorted.
someone like woods said:I think that this is what everybody thought when we hit 1636. We all expected that the prices were going to at least stop if not go down a little. There was a serious lull in the market for a few months and then the madness started all over again.
I would not advise anyone that was in a position to buy a tulip and needed a flower, to wait and "hope" to get it cheaper next year. I could not be responsible for the consequences of that advice.
This correction has been coming a long time and probably will come but nobody in the business is seeing it coming soon. The price of bulb growing land has gone from half a million guilders an acre to over a million in the greater Amsterdam region in the past 18 months. Who do you think is buying up that land and do you think that they are idiots. I doubt it.
That's the problem, there's no way I could afford anything that would do me for the next 20 yrs - what with the 8 kidsif your buying your own home to live in for next 20 years house price movements shouldnt be of too much concern to you.
Without trying to be smart, where did you get this information for number 1 and 2, and what exactly do you mean by No.4?1. Irish house prices relative to income are the highest in the world.
2. Irish prices are higher than the UK (about 40% higher) but salaries are lower in general.
3. Salaries are growing at 3-5% but prices are growing at twice that rate and mortgage withdrawals are three to four times that rate.
4. You can rent a house in nice parts of Dublin for about 60% of the cost of buying it. This is based on personal experience of our rented house in South Dublin. People are willing to pay a large premium for "ownership" which is unrealistic.
5. Buy-to-lets are just breaking even for many people at interest rates of 3.5% or so. Even if we see another ECB rise of 0.5% before year-end, the typical €350K mortgage for a 2-bed apartment in much of the country will add over €150/month to costs which will make yields for many buy-to-let investors turn negative.
what exactly do you mean by No.4?
woods said:I think that this is what everybody thought when we hit 2000 and turned the century. We all expected that the prices were going to at least stop if not go down a little. There was a serious lull in the market for a few months and then the maddness started all over again.
I would not advise anyone that was in a position to buy a house to live in and needed a house, to wait and "hope" to get it cheaper next year. I could not be responsible for the consequences of that advise.
This correction has been coming a long time and probably will come but nobody in the business is seeing it coming soon. The price of developement land has gone from half a million an acre to over a million in the greater Cork region in the past 18 months. Who do you think is buying up that land and do you think that they are idiots. I doubt it.
Whilst I understand what you are saying, would I be right in saying that if you bought an apartment for 350K at 3.25% for 40yrs (there are a number of apartments close to town that could be purchased for this price), your repayments then would be €1303 per month, 948 interest and 356 capital, would this not then be more advantageous to you than renting (dead money as I'm sure your mammy tells you - experienceCurrently renting an apartment for E1400 per month. Similar apartment in the smae development was sold for ~E600000 last year. 100% mortgage @ 3.25% over 40 years would cost E2235/month and management fees and waste etc approx E150/month.
Therefore total cost of buying is E2385/month compared to E1400 to rent - 58.7% of the cost
.Whilst I understand what you are saying, would I be right in saying that if you bought an apartment for 350K at 3.25% for 40yrs (there are a number of apartments close to town that could be purchased for this price), your repayments then would be €1303 per month, 948 interest and 356 capital, would this not then be more advantageous to you than renting (dead money as I'm sure your mammy tells you - experience). Obviously you now have interest rate risk to consider and the possibility of a correction
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