Looking to Buy a house soon, Good or Bad?

L

lookingtobuy

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Very nervous about buying at the moment as I personnaly feel that the property market may be on a turn?!? Of course this might just be cause it's my turn to invest! But looking at prices here in Cork they look as though they are not increasing as much as they were and therefore might stop increasing, lets say, even next year and then start to fall. This frightens me as I would really only be buying now to protect myself if the prices were to go crazy again and I'm stuck in two years time paying and extra 30%. I am in a position not to buy and wait if I want as I live at home and have no problems with that. I do feel that I want my own place though but I'd be buying outside where I'd eventually want to settle and if it was the case where the prices were to come down I'd be stuck out there then and not really wanting to be there. I also have the option of buying with a buddy of mine now and pay half a morgage for half a house but closer to where I'd want to be. Please advise. Thanks
 
Re: Looking to Buy a house soon, Good or Bad? HELP

Please note that discussion of house prices is suspended on Askaboutmoney.

That does not prevent people from answering this question about the implications of a house price fall. Posts which speculate about house price movements will be deleted.

Brendan
 
Re: Looking to Buy a house soon, Good or Bad? HELP

The way to think about this is to forget about prices going up or down. The bottom line is can you afford to pay the mortgage? and can you still afford it if rates go up in the next two years? If not, think about fixed mortgage. It is irrelevant as to whether the price goes up or down after you buy the house.
 
Re: Looking to Buy a house soon, Good or Bad? HELP

Welfarite said:
The way to think about this is to forget about prices going up or down. The bottom line is can you afford to pay the mortgage? and can you still afford it if rates go up in the next two years? If not, think about fixed mortgage. It is irrelevant as to whether the price goes up or down after you buy the house.
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He indicated that he would be looking to trade up in the future, so I would have thought that concern about a possible drop in prices would be very relevant.
 
Re: Looking to Buy a house soon, Good or Bad? HELP

I wouldn't necessarily agree, e.g. if the property the OP owns stays at the same price it would be reasonable to assume that the potential trading up property would not have seen a major proce change.
This is only an observation & depends on a number of factors including but not only the type/location of either property
 
Re: Looking to Buy a house soon, Good or Bad? HELP

You can't really have it both ways, i.e. buy now to cushion against future price rises but at the same time be worried about prices falling???

FWIW, if you are pretty sure that you will want to trade up in 2 years time (a fairly short space of time), I would wait and buy then.
 
Re: Looking to Buy a house soon, Good or Bad? HELP

lookingtobuy said:
... I would really only be buying now to protect myself if the prices were to go crazy again and I'm stuck in two years time paying and extra 30% .... I'd be buying outside where I'd eventually want to settle and if it was the case where the prices were to come down I'd be stuck out there then and not really wanting to be there.
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I've selectively quoted, but I think those are the most important points you made. You don't really want to live there, you're panicking about prices going up further (out of your reach) AND panicking about them dropping.

My advice is don't buy anywhere you don't really want to live.
 
Re: Looking to Buy a house soon, Good or Bad? HELP

Welfarite said:
The way to think about this is to forget about prices going up or down. The bottom line is can you afford to pay the mortgage? and can you still afford it if rates go up in the next two years? If not, think about fixed mortgage. It is irrelevant as to whether the price goes up or down after you buy the house.
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An excellent point that I feel has been lost on alot of people over the past 5 years. A house is for living in not worrying about. If you can afford it and like it then buy it.

As for trading up, why buy a house you don't want to live in for more than 2 years? Sounds like you can't make up your mind why you are buying it and that for me is dangerous ground. Probably worth your while having a good think about you motives on that one. If your still set on your plan then I wouldn't worry too much about future falls/rises, they're pure speculation as no one fully knows the market and even if prices did substantially move they would move with a certain degree of correlation leaving you roughly in the same position as before in terms of your target home.

Anyhow bottom line is where you want to live and if you can afford it. Don't stress yourself trying to beat the market, leave that to people with big egos!!!
 
Re: Looking to Buy a house soon, Good or Bad? HELP

Stiofan said:
even if prices did substantially move they would move with a certain degree of correlation leaving you roughly in the same position as before in terms of your target home.
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Rubbish... if the OP ended up in negative equity, how would that leave them "roughly in the same position as before" in terms of their target home? Also, I think it's very naive to think that any movements will affect the whole market uniformly.
 
Re: Looking to Buy a house soon, Good or Bad? HELP

Can't help feeling reading this thread that its hard to give sound advice without mentioning the 'elephant in the room'. (banned price house movements)

But if you are unsure about purchasing you should use the next few months to save more money so that you will have a higher deposit.
 
Re: Looking to Buy a house soon, Good or Bad? HELP

Its always been my impression that a certain amount of price inflation is desirable/required if you are looking to trade up in the future, as this will increase your equity. Certainly if you can't sell without owing the bank a sizeable amount of money, it would be very difficult to buy a new home.
 
Thank you for all you posts people.

I am new but feel it strange that these discussions are closed (Brenda's comment). I would think if people want to discuss, let them discuss. I can see her point however, reading the past threads, that there is a limit to it.

Can you send me some links to these discussions please?

Regards
 
exile said:
Well that's just plain wrong. Interest rates and income are both factors in calculating amount that can be borrowed.
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Agreed. I would get about approx 50K less in a mortgage from 12 months ago because of rising rates. That wuold affect my affordability.
 
lookingtobuy said:
...I would really only be buying now to protect myself if the prices were to go crazy again ... I am in a position not to buy ... I'd be buying outside where I'd eventually want to settle and if it was the case where the prices were to come down I'd be stuck out there then and not really wanting to be there
Click to expand...

You seem scared not to buy in case prices go up, but scared to buy in case they go down, neither of which is unreasonable, but it's a lot of pressure and stress for you. It sounds like you'd be better off making a conscious decision to hold on to your cash and rent somewhere you'd really like to live, while saving a decent deposit for buying the place of your dreams. Just my opinion, though.

If you want to see other discussions on where the market may go, see
http://www.askaboutmoney.com//showthread.php?t=31710, http://www.boards.ie/vbulletin/showthread.php?t=2055033806 or [broken link removed].
 
polar said:
You seem scared not to buy in case prices go up, but scared to buy in case they go down, neither of which is unreasonable, but it's a lot of pressure and stress for you.
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Agreed. The two things that can kill you in any market are Fear & Greed. If you feel yourself to be at either end of these extremes - perhaps you need to step back and re-assess your situation for a while.
 
there is much more pressure on people in ireland to keep up with the "jones". everyone is mortgaged to the hilt with car loans and tv loans because they are "must have" items and that is the new mentality over there. i want it and i want it "now" just the same as us in the UK. over here we hardly know our neighbours so people don't feel so pressured to keep up.
we all know that when you drive round in a big 07 jeep, people immediately think "Go, they must be minted" - in fact probably the only person doing well is the lender ! Appearances matter to people.
 
Re: Looking to Buy a house soon, Good or Bad? HELP

shanegl said:
Its always been my impression that a certain amount of price inflation is desirable/required if you are looking to trade up in the future, as this will increase your equity.
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No....simply means you actually need to borrow more money to trade-up (on fair assumption that your trade-up house as increased by roughly the same % as your own house)
And trading up is only about equity, but repayment capacity based on incomes.
 
This was a specific question which has elicited well articulated useful answers.

I have deleted the discussion of house prices and the irritating Great Financial Debates type stuff.

Brendan
 
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