Have we gone full circle on our attitude to debt

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becky

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A lot of new posts about applying a mortgage. It seems there is renewed interest from potential buyers.

Not much change in attitudes though. People with outstanding loans wondering if they will qualify for a 20/ 30 year mortgage. Savings record not great and some happy couples looking to feather a nest without much thought to the unromantic idea that the relationship might not last.


There are some good posts here which could help them make an informed decision. But it seems they mostly find the website and ask, how will I get a mortgage because last night me and my b/g friend decided we’d like a house together.

Anyone else notice this?
 
becky said:
Anyone else notice this?
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Ive noticed it over the past few months on other forums as well as here. What I think is actually going on is young people who take no notice of the news, politics, or the economy deciding they want to buy a house - with no real notion of whats gone on in recent years. The bubble burst in 2007. Its 5 years on. So you could have current 25-30 year olds who spent the past 10 years growing up and having fun and dont know anything about whats been happening.
 
You can't stop people wanting to grow and enjoy new things. Buying a house and creating a home is a great step in life and one that many aspire to do. There are also plenty of people in decent positions to buy homes and we shouldn't get bogged down in the notion that house buying is a bad thing that is only associated with the celtic tiger years. People bought homes long before and struggled to pay their way then. At least now prices have dropped dramatically and the choice available is greater.
The attitude to house buying just needs to be kept on an even keel, and if people are buying to live in then I see no problem whatsoever.
 
It is a good time to buy, if you have a reasonably steady job then why not. Following the herd is never the best idea, previously the herd bought at top dollar and in multiples, now the herd is afraid to buy.

Why criticise someone who wants to get a bargain.
 
Betsy Og said:
It is a good time to buy, if you have a reasonably steady job then why not. Following the herd is never the best idea, previously the herd bought at top dollar and in multiples, now the herd is afraid to buy.

Why criticise someone who wants to get a bargain.
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I would'nt call houses in this country 'bargains' just yet!
 
The decision on when's good to buy should be a personal choice based on your own circumstances. If everybody took that attitute we could begin to treat homes as homes rather than a financial commodity. A stabilisation of prices to long term natural levels (which is in the broad national interest) would follow.

We do have some demographic skews in cohorts of people being born each year ranging from 50,000 to 70,000 in recent years. Based on this, the most variance in "natural" demand for housing units should be 25,000 to 35,000 in any given year.

The problem starts when you have unnatural situations including a massive increase in people looking to buy rental properties, the 30-35 year old "sex and the city" generation of females who suddenly believed a 25 year old single girl needed to own their own apartment, banks throwing silly money at people, etc.

Overall if we can mature as a people in terms of attitudes towards home ownerships, there should be 30,000 couples per annum looking to get their own place creating a long term demand for the same number of housing units to be built once the overhang is used up.

Building 90,000 units p.a. is very clearly unsustainable, but equally we can't brand every couple around the 30ish age mark as fools for wanting to get a place, there is no logical conclusion in believing people in this demographic should never again think about home ownership because of the madness of the last decade.
 
Assuming you want to buy to live in it, and that you have at least a 5 year time horizon for staying in the property (otherwise just rent), then while you may or may not be calling the bottom of the market now, I'd be fairly confident that in 5 years time your home would be worth more than you paid for it.

I'd qualify the above by saying that you should stick to quality - paying a bit more. There's some rubbish that will never be any good.

I dont think you should get hysterical if you buy today and its down 10% in a years time (I think its fair to say the big drops have happened), you have 5 years (another 4) before you're thinking of selling. Sure you can keep holding off trying to call the bottom perfectly, but is it worth the hassle. Suppose if you're very pessimistic you could wait until the recovery has started and miss the bottom but catch the upward trajectory (which will be calm enough to catch! - I think yer man from a year ago about the table tennis ball shooting out of the water was insanely optimistic).

Put it this way if I had no other debt I'd love to snap up an apartment in one of the better parts of South Dublin - e.g. booterstown avenue, the merrion road etc. Now I havent been tracking them in any detailed sense (since I definitely wont be buying), but if I had spare cash I dont think I'd be cursing my luck in the years ahead. Maybe there's individual issues with those I've mentioned, but a cheap apartment in one of the choice cuts of the Southside cant be bad.
 
Betsy Og said:
Sure you can keep holding off trying to call the bottom perfectly, but is it worth the hassle?
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That's the basic point. Given prices have already fallen 50% there is not even a mathematical possibility that you could lose as much as the person who bought 5 years ago.

If you have no great urge to own a place, there's no panic. But if getting your own place is something that is important to you, and you can afford it, the prospect of lower prices in another 5 years does not mean that the right thing to do is wait. There are other factors.
 
I have recently started a job where most of the people in the company are significantly younger than me. On my department the nearest to my age is 8 years younger, the furthest is 20 years younger. One thing I have noticed is the younger ones have no concept of the value of money. They complain about being "underpaid" yet are on above the national average for the work we do, have a very good pension (10% contribution 7% of which is paid by the company)

Almost all of them still live at home, yet found it difficult to survive an extra week without pay due to getting paid early in December, a few of them talking about borrowing petrol money from the mammy and daddy to get to work. I fear for them, these are the age group you would expect to be saving for/buying homes.

There is absolutely nothing wrong with someone wanting to buy a home, but when we are sending out young adults who despite having a good wage and minimal outgoings cannot understand the concept of living on a budget, I do worry how they are going to understand the consequences of taking on a €150,000+ debt in future.
 
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