wld u sell PPR & rent? buy after(poss)crash?
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Apologies Murray I read the subject as:
"Would you sell PPR and rent or buy after a possible crash?"
Never try and pick a market top or a market bottom is my opinion. Make the decision that makes the most financial sense, rather than following the herd (into or out of the pool).
I'm selling my PPR now and may buy back in in a year or two if it looks like I'll be sticking around longterm.
My situation may be different than others though because my PPR is a FTB home, so I'd have to sell it in a year or two anyway.
"Would you sell PPR and rent or buy after a possible crash?"
Never try and pick a market top or a market bottom is my opinion. Make the decision that makes the most financial sense, rather than following the herd (into or out of the pool).
I'm selling my PPR now and may buy back in in a year or two if it looks like I'll be sticking around longterm.
My situation may be different than others though because my PPR is a FTB home, so I'd have to sell it in a year or two anyway.
One reason I am asking is that I have done / am in the process of doing this and I'm trying to convince myself I have done the right thing ! - Gone 'sale agreed' on a property that I would not have stayed in long term anyway (its an apartment & planning a family etc) - I figure it is best for me to get out 'at the top' (risky I know!) and rent - re-enter when it is more of a buyers market.... ANy thoughts??
liteweight
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The only other thoughts I had on this issue was that if I were to sell my PPR, in order to rent, I'd take the interest relief at source on the mortgage, as compared to rent relief into account. The former is much higher than the latter, especially for a first time buyer.
For example, Mortgage repayment of 1k permonth, less TRS should equal rent, less rent relief, at the very least. Otherwise you sell your PPR which appreciates each year (I know there are different thoughts on this, but I'm betting prices will stabilise ) to pay a higher net sum to a landlord.
You may lock away your profit in a high yield deposit account to offset some of this but you have lost the ability to release equity and the stability that owning your own home can bring.
It's interesting, and has been going round in my head of late, I must admit.
On balance I'd prefer to own rather than rent unless I could get a long term lease in a place I'd like to live. That could be my age though!
For example, Mortgage repayment of 1k permonth, less TRS should equal rent, less rent relief, at the very least. Otherwise you sell your PPR which appreciates each year (I know there are different thoughts on this, but I'm betting prices will stabilise ) to pay a higher net sum to a landlord.
You may lock away your profit in a high yield deposit account to offset some of this but you have lost the ability to release equity and the stability that owning your own home can bring.
It's interesting, and has been going round in my head of late, I must admit.
On balance I'd prefer to own rather than rent unless I could get a long term lease in a place I'd like to live. That could be my age though!
The main thing for me is not so much the possibility of prices rising or falling but the fact that you are dealing with an illiquid market.
I'm selling now because I foresee it being significantly more difficult to sell in a year's time when I might need to sell.
Whether the price falls, remains static or confounds expectations by continuing to rise, is secondary. With so much extra FTB supply coming onstream and singificantly less demand (due to the amount of demand brought forward because of rising prices in the last few years), selling FTB homes and apartments is bound to get tougher.
Even if the buyers are willing to pay higher prices, they will definitely have more places to choose (of course economics 101 says prices should fall in this scenario but that's for another day).
So, if I want to buy a bigger place in year's time, even though I may be competing on price with the trader-uppers, I will have the significant advantage of not being part of a property chain.
I'm selling now because I foresee it being significantly more difficult to sell in a year's time when I might need to sell.
Whether the price falls, remains static or confounds expectations by continuing to rise, is secondary. With so much extra FTB supply coming onstream and singificantly less demand (due to the amount of demand brought forward because of rising prices in the last few years), selling FTB homes and apartments is bound to get tougher.
Even if the buyers are willing to pay higher prices, they will definitely have more places to choose (of course economics 101 says prices should fall in this scenario but that's for another day).
So, if I want to buy a bigger place in year's time, even though I may be competing on price with the trader-uppers, I will have the significant advantage of not being part of a property chain.
Agreed room305 , my humble opinion is the market in Ireland is in for tough times from 2007 onward - especially apartments & houses outside M50. Massive amount for sale - higher interest rates etc etc.....
Also , if a person bought 4 or 5 yrs ago - has no intention of moving (ie the property will suit their ongoing needs- can extend if they have a family etc) they will be ok ish.. buying 2nd/3rd property in 2006 is not smart.
Agree also with the point about an illiquid market - cash buyers will be in a great position in a few years when property chains are the norm. (this was the case in UK for the last few yrs)
Im happy I have taken the desicion to sell & wait & see....... Saying that , we are in a luck position - early 30's - living in sin! - both good jobs - no kids - no strong commitments in Ireland - would consider working & living abroad etc. etc.
Also , if a person bought 4 or 5 yrs ago - has no intention of moving (ie the property will suit their ongoing needs- can extend if they have a family etc) they will be ok ish.. buying 2nd/3rd property in 2006 is not smart.
Agree also with the point about an illiquid market - cash buyers will be in a great position in a few years when property chains are the norm. (this was the case in UK for the last few yrs)
Im happy I have taken the desicion to sell & wait & see....... Saying that , we are in a luck position - early 30's - living in sin! - both good jobs - no kids - no strong commitments in Ireland - would consider working & living abroad etc. etc.
I am in the same boat of selling and have no intentions of buying in the short term. But it's not just my level of discomfort with the current prices of houses, it's actually how crazy rent v mortgages now are....
To keep things simple my home in Dublin monthly costs are
Mort (current) - 1400
Int relief - 130
Ass and Ins etc. - 51
Total outgoings ---- 1320 (and will increase in next few months)
Rent - 700 for a 3/4 bed house down the country - where I'm moving to.....
Don't know what little rent relief I'll get, but it's not much...
Thats a difference of 620 per month in the blink of an eye... Never mind the 4% interest that I'll get on the profit of my sale. --- Thats my personal cash flow perspective
The second reason is market driven -
Also, if I was to buy the house I own at it's current value I'd be paying over 2,000 of a mortgage for a house that would rent for only 1,200/1,250. That level of disparity is very worrying.. Was watching that "Property Ladder" programme during the week. A lady renovated a house and only made 10,000 profit based on valuations...
Sarah - the presenter - said renting may be an option. So they get agents in to give rent figures. I have my calculator out - average rent suggested, multiple by 12 divide by blah, blah, blah......... Before I'm finished Sarah says - your looking at close to 7% per annum gross...
From what I've read/seen in Ireland that is brilliant value - then I hear the clanger --------
We all know you need to be getting a 10% yield to be comfortable with renting, but 7% isn't too bad - but not great................................. In Ireland you are looking at 3 or 3.5% at best.. I'm happy to sit back for a while...
To keep things simple my home in Dublin monthly costs are
Mort (current) - 1400
Int relief - 130
Ass and Ins etc. - 51
Total outgoings ---- 1320 (and will increase in next few months)
Rent - 700 for a 3/4 bed house down the country - where I'm moving to.....
Don't know what little rent relief I'll get, but it's not much...
Thats a difference of 620 per month in the blink of an eye... Never mind the 4% interest that I'll get on the profit of my sale. --- Thats my personal cash flow perspective
The second reason is market driven -
Also, if I was to buy the house I own at it's current value I'd be paying over 2,000 of a mortgage for a house that would rent for only 1,200/1,250. That level of disparity is very worrying.. Was watching that "Property Ladder" programme during the week. A lady renovated a house and only made 10,000 profit based on valuations...
Sarah - the presenter - said renting may be an option. So they get agents in to give rent figures. I have my calculator out - average rent suggested, multiple by 12 divide by blah, blah, blah......... Before I'm finished Sarah says - your looking at close to 7% per annum gross...
From what I've read/seen in Ireland that is brilliant value - then I hear the clanger --------
We all know you need to be getting a 10% yield to be comfortable with renting, but 7% isn't too bad - but not great................................. In Ireland you are looking at 3 or 3.5% at best.. I'm happy to sit back for a while...
€330 per year (a tax credit of €1650@20%) is the minimum (depending on maritial status, age (<55) etc. it can be higher - €3300 or €6600 @20% depending if you match one or both of the additional details) maximium you can claim. [hope that makes sense!]
So, another saving of €27.50 per month (minimum) on the rental cost.
CelloPoint
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Now that is very interesting indeed.
I would've been happy to sell over the summer if I'd had the time to go through the whole proccess. A main residence is not a very liquid asset, and for many people the stress and disruption and work involved is too much of a deterrent, wherever they think the market is going. For now I think we'll sit tight and ride out the fluctuations - too much stress and quality of life problems in moving. Having said that, I do think our place is in a better location to ride out a crash. We're in a well rennovated city-centre property with good on-street parking for residents, and since traffic into Dublin will undoubtedly be horrible for the next five years at least, we're betting on the property holding its value. I never looked at this place as having the potential for any great capital gain as it was expensive enough in 2004! Pride goeth before a fall and greed goeth before a crash.
If your married (& jointly assessed) or widowed the rent credit is €660. If your married or widowed and over 55 you can double the credit again to €1,320.
Just for clarity (my first post did appear a bit confusing even to me)....
€1650 = single and under 55.
€3300 = married(widowed) and under 55 OR single and over 55.
€6600 = married(widowed) and over 55.
All treated at 20% not the marginal rate.
Info available from .
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