To Buy Or Not To Buy (+average House Prices)

[Ballymena Boy]

It’s been a while since I contributed anything to the site, so I thought I would give my view on the current Northern Ireland housing market. As some of you may be aware I am an investment (BTL property) bull and would recommend you buy in the current market provided your cash flow stacks up. I would also recommend first time buyers dive right in, especially in the lower end of the market (see below), provided you get a good discount on the current asking price. A good discount in today’s market is certainly possible, if you have the nuts to go for it.

First things first, property does rise in value and will eventually double in price over time. The most important term here being “over timeâ€. ANYTIME is therefore a good time to buy provided you follow simple rules discussed many times in this particular web site, the most important two, being, house price versus wage and also loan to value. Based upon my own calculations I would recommend a Maximum of 4 times your wage to loan amount. Other people recommend 3 to 3.5 times, but taking into account various factors 4 times seems a reasonable maximum to me. With loan to value obviously the higher deposit you can get (hence lower LTV) the better. With a high percentage deposit you can still have a range of mortgage providers to choose from and you also get the best interest rate deals.

Another important aspect to appreciate is that any property investment (BTL or to live in) HAS to be viewed as long term. Effectively this negates any future drops in house prices over the next year, because we are holding for at least ten years (my goal). I estimate it will take 12 years for most property to return to 2007 prices, but that still give me 100% increase in property value, on the prices I am currently paying for property, i.e. asking price minus discount. You will now see WHY any 5-15% drop over the next year or so is insignificant when compared to the end long term result.

Now that I have irritated most bears on this site, let me further annoy you by actually agreeing with you on a specific point:

The price rise Q2 was indeed a blip, further price falls are inevitable. I have kept a list of the number of houses for sale within certain price ranges (from propertynews.com). The price ranges are ₤30,000 to ₤80,000, ₤30,000 to ₤90,000 and ₤30,000 to ₤100,000. I started my review on the 24/09/08 and have reviewed it, usually, once per week. I can confirm that of the 82 reviews I carried out, all but three of these showed an increase in the number of property in that group for sale. On the 24/09/08 there were 223 properties for sale in the 30k-90K group; by the 21/8/09 this had reached 1040 properties. In the 30k-100k group; on the 24/09/08 there were 560 properties, yet by the 21/08/09 there were 1,864. In the 30K-80K group; on the 13/11/08 there were 139 properties, but by the 21/08/09 there were 508. This means that houses are continuing to drop in price moving the complete property market down. Further house price drops (based on actual sales) are inevitable. You will not see the market stabilizing until the number of properties in these groups stops increasing and begins to reduce. This has NOT occurred to date.

I also believe we have an odd situation regarding the University of Ulster (UoU) average house price as calculated for Q2 2009. The increase in the average NI house price does not sit easy with the figures I provided in the paragraph above. So I carried out a wee bit of further investigation. If you look at the prices for homes “sale agreed†on the TDGITS website it is interesting to note that the majority of houses purchased are in the mid price range bracket (100-200k) and not at the lower end of the market (as I had expected). This is backed up by the fact that the UoU survey states that only 19% of house sales were in the low price bracket (under 100K). This leads me to believe that (proper) working class families, low income singles and even BTLers are mostly absent in today’s property market. It is this fact which is currently pushing UP the average house price, yet at the same time we are seeing asking prices fall in ALL lower house price brackets. However as the number of properties continues to increase in the lower price brackets (as is occurring now) and as mortgage restrictions ease (even slightly), then sooner or later working class people will enter this market (under 100k properties), on mass thus having a crushing impact on the UoU average house price calculation. My own estimate is that the average house price will drop a further 10% -15%.

So we currently have the very surreal situation where we have an average price rise, yet falling asking prices. You can already get some real bargains in the (below) 100K market, and it is for this reason that I state that now is a good time to buy. If you get a decent ex-council house for say 70-90K (hundredths available) then any future UoU average house price drops will have no relevance, as their figure has to be rebased as lower end buyers enter the market. Thus by autumn 2010 we will have another surreal situation where houses in the lower price brackets will not actually drop in value (sale agreed price) even though the average NI house price will decline.

Another amusing scenario would be, where the actual values of all property, i.e. the sale price (from say Q3 to Q4 2010) could stay exactly the same, yet the average house price (as calculated by UoU) would drop substantially; entirely due to the effect I discussed above.

We could even go one step further, whereby Q4 2010, the actual price people pay for their new house could rise slightly, yet this would be reported by a fall in the UoU average house price. Imagine that, house prices rising and falling at the same time - oh dear BB’s head just exploded.

Obviously the above is entirely dependant upon the rate at which working class families return to the market in proper numbers. Working class families make up the majority of the market in Northern Ireland and therefore have considerable impact on house prices.

All of this will definitely lead to even more confusion on the great NI housing debate.

Always remember nothing is impossible with Northern Ireland property.

[Belfast Boy]

Were you not recommending people to buy property this time last year?

They would have lost thousands from listening to your advice.

[BelfastVI]

What a mixed message. Now is a good time to buy but property will fall a further 10 to 15%.

Your answer to your own quandary is to make sure you buy at a price, I presume 10 to 15% below the current asking prices. Surly if this is the case you would wait another few months and then just buy at 10 to 15% under the future reduced prices.

People talk about current asking prices and talk about offering at a level below it. Who cares what the current asking price is it might still be at peek price on some houses so undercutting it by 15% would be paying too much.

If you are convinced house prices are going to fall by a further 10% then there is no justifiable reason in buying now. Discussing asking prices or a margin off them is nonsensical as they are not aligned with anything. In some cases the asking price is at or below the proper price (if I can use that phase) and some times it is outrageous above.

I stopped examining the 'sale-agreed' figures on TTDGTTS site as it become apparent that many were going back on the market and there was no proof that it was the actual price that the sale was actually agreed at, but merely the last known asking price.

I have tried to study the 'facts' you have presented and it is a unique way of looking at things. You do realise that the extra figures for say the 30k to 80k are also included in the 30k to 90k and so on.

Basicly they are showing that the number of houses for sale in the under 100k level have more than doubled in the last year. With a 40% drop in sale price I cant see how you would expect to see anything but this. And to say that the growth of this bracket has to stop and reverse before average prices start to rise is again non-nonsensical.

The situation that you say is surrel ie rising selling prices and falling asking prices is exactly what we will have and is not surrel at all. Even though the UUJ shows that prices leveled over tha last 3 months the TTDGTTS website was still, and will continue to show asking prices being dropped. This will continue even if the Nationwide shows the selling prices rising as people simple adjust down to the new selling prices to get there house away.

Estate agents tell me that up to now it was only the lower priced houses that were moving, those who were not in a chain. However the 'burst' (if I can use that ) of new sales will free up chains and should actually release people to purchase on up the chain. The Nationwide survey work their figures to avoid this affecting their results, but as far as I am aware the UUJ reports do not.

I am not sure on the technical definitions between working class and middle class. Is it to do with where they are living or the level of income? Sorry if I am wrong about this but I, perhaps wrongly assumed that most middle class owned their own house and most working class rented. Again I apologise as I have never put any thought into that before and I hope I offend no one. I have never seen it discussed before and would have though the middle class to be the main purchasers. Perhaps my classifications here are incorrect.

From reading your post again I have to be honest and admit I don't know what you are saying and am starting to think you are a troll.

[Rock-n-Roll]

It’s been a while since I contributed anything to the site, so I thought I would give my view on the current Northern Ireland housing market. As some of you may be aware I am an investment (BTL property) bull and would recommend you buy in the current market provided your cash flow stacks up. I would also recommend first time buyers dive right in, especially in the lower end of the market (see below), provided you get a good discount on the current asking price. A good discount in today’s market is certainly possible, if you have the nuts to go for it.

First things first, property does rise in value and will eventually double in price over time. The most important term here being “over timeâ€. ANYTIME is therefore a good time to buy provided you follow simple rules discussed many times in this particular web site, the most important two, being, house price versus wage and also loan to value. Based upon my own calculations I would recommend a Maximum of 4 times your wage to loan amount. Other people recommend 3 to 3.5 times, but taking into account various factors 4 times seems a reasonable maximum to me. With loan to value obviously the higher deposit you can get (hence lower LTV) the better. With a high percentage deposit you can still have a range of mortgage providers to choose from and you also get the best interest rate deals.

Another important aspect to appreciate is that any property investment (BTL or to live in) HAS to be viewed as long term. Effectively this negates any future drops in house prices over the next year, because we are holding for at least ten years (my goal). I estimate it will take 12 years for most property to return to 2007 prices, but that still give me 100% increase in property value, on the prices I am currently paying for property, i.e. asking price minus discount. You will now see WHY any 5-15% drop over the next year or so is insignificant when compared to the end long term result.

Now that I have irritated most bears on this site, let me further annoy you by actually agreeing with you on a specific point:

The price rise Q2 was indeed a blip, further price falls are inevitable. I have kept a list of the number of houses for sale within certain price ranges (from propertynews.com). The price ranges are ₤30,000 to ₤80,000, ₤30,000 to ₤90,000 and ₤30,000 to ₤100,000. I started my review on the 24/09/08 and have reviewed it, usually, once per week. I can confirm that of the 82 reviews I carried out, all but three of these showed an increase in the number of property in that group for sale. On the 24/09/08 there were 223 properties for sale in the 30k-90K group; by the 21/8/09 this had reached 1040 properties. In the 30k-100k group; on the 24/09/08 there were 560 properties, yet by the 21/08/09 there were 1,864. In the 30K-80K group; on the 13/11/08 there were 139 properties, but by the 21/08/09 there were 508. This means that houses are continuing to drop in price moving the complete property market down. Further house price drops (based on actual sales) are inevitable. You will not see the market stabilizing until the number of properties in these groups stops increasing and begins to reduce. This has NOT occurred to date.

I also believe we have an odd situation regarding the University of Ulster (UoU) average house price as calculated for Q2 2009. The increase in the average NI house price does not sit easy with the figures I provided in the paragraph above. So I carried out a wee bit of further investigation. If you look at the prices for homes “sale agreed†on the TDGITS website it is interesting to note that the majority of houses purchased are in the mid price range bracket (100-200k) and not at the lower end of the market (as I had expected). This is backed up by the fact that the UoU survey states that only 19% of house sales were in the low price bracket (under 100K). This leads me to believe that (proper) working class families, low income singles and even BTLers are mostly absent in today’s property market. It is this fact which is currently pushing UP the average house price, yet at the same time we are seeing asking prices fall in ALL lower house price brackets. However as the number of properties continues to increase in the lower price brackets (as is occurring now) and as mortgage restrictions ease (even slightly), then sooner or later working class people will enter this market (under 100k properties), on mass thus having a crushing impact on the UoU average house price calculation. My own estimate is that the average house price will drop a further 10% -15%.

So we currently have the very surreal situation where we have an average price rise, yet falling asking prices. You can already get some real bargains in the (below) 100K market, and it is for this reason that I state that now is a good time to buy. If you get a decent ex-council house for say 70-90K (hundredths available) then any future UoU average house price drops will have no relevance, as their figure has to be rebased as lower end buyers enter the market. Thus by autumn 2010 we will have another surreal situation where houses in the lower price brackets will not actually drop in value (sale agreed price) even though the average NI house price will decline.

Another amusing scenario would be, where the actual values of all property, i.e. the sale price (from say Q3 to Q4 2010) could stay exactly the same, yet the average house price (as calculated by UoU) would drop substantially; entirely due to the effect I discussed above.

We could even go one step further, whereby Q4 2010, the actual price people pay for their new house could rise slightly, yet this would be reported by a fall in the UoU average house price. Imagine that, house prices rising and falling at the same time - oh dear BB’s head just exploded.

Obviously the above is entirely dependant upon the rate at which working class families return to the market in proper numbers. Working class families make up the majority of the market in Northern Ireland and therefore have considerable impact on house prices.

All of this will definitely lead to even more confusion on the great NI housing debate.

Always remember nothing is impossible with Northern Ireland property.

welcome back

as you promised would you

like to tell us how your investments are performing?

what about your 06 one ?

ah go on give us the details?

rock on!

[Rock-n-Roll]

What a mixed message. Now is a good time to buy but property will fall a further 10 to 15%.

Your answer to your own quandary is to make sure you buy at a price, I presume 10 to 15% below the current asking prices. Surly if this is the case you would wait another few months and then just buy at 10 to 15% under the future reduced prices.

People talk about current asking prices and talk about offering at a level below it. Who cares what the current asking price is it might still be at peek price on some houses so undercutting it by 15% would be paying too much.

If you are convinced house prices are going to fall by a further 10% then there is no justifiable reason in buying now. Discussing asking prices or a margin off them is nonsensical as they are not aligned with anything. In some cases the asking price is at or below the proper price (if I can use that phase) and some times it is outrageous above.

I stopped examining the 'sale-agreed' figures on TTDGTTS site as it become apparent that many were going back on the market and there was no proof that it was the actual price that the sale was actually agreed at, but merely the last known asking price.

I have tried to study the 'facts' you have presented and it is a unique way of looking at things. You do realise that the extra figures for say the 30k to 80k are also included in the 30k to 90k and so on.

Basicly they are showing that the number of houses for sale in the under 100k level have more than doubled in the last year. With a 40% drop in sale price I cant see how you would expect to see anything but this. And to say that the growth of this bracket has to stop and reverse before average prices start to rise is again non-nonsensical.

The situation that you say is surrel ie rising selling prices and falling asking prices is exactly what we will have and is not surrel at all. Even though the UUJ shows that prices leveled over tha last 3 months the TTDGTTS website was still, and will continue to show asking prices being dropped. This will continue even if the Nationwide shows the selling prices rising as people simple adjust down to the new selling prices to get there house away.

Estate agents tell me that up to now it was only the lower priced houses that were moving, those who were not in a chain. However the 'burst' (if I can use that ) of new sales will free up chains and should actually release people to purchase on up the chain. The Nationwide survey work their figures to avoid this affecting their results, but as far as I am aware the UUJ reports do not.

I am not sure on the technical definitions between working class and middle class. Is it to do with where they are living or the level of income? Sorry if I am wrong about this but I, perhaps wrongly assumed that most middle class owned their own house and most working class rented. Again I apologise as I have never put any thought into that before and I hope I offend no one. I have never seen it discussed before and would have though the middle class to be the main purchasers. Perhaps my classifications here are incorrect.

From reading your post again I have to be honest and admit I don't know what you are saying and am starting to think you are a troll.

be carefull VI

boys from the bible belt can be somewhat touchy

where their roots are concerned!

rock on!

[eyes wide open]

considering the avarice of the BTL brigade has been a key ingredient of this bubble and the havoc it has wreaked, i find it difficuilt to remain civil when i read one 'lording' it on here.

IF, by some miracle you walk away from this unscaved, it will be because HMG pulled of the economic miracle of the century, and certainly not because of your investment wisdom.

[azogar]

welcome back

as you promised would you

like to tell us how your investments are performing?

what about your 06 one ?

ah go on give us the details?

rock on!

it's a long way to the top if you wanna btl

[Rock-n-Roll]

it's a long way to the top if you wanna btl

ah

PP

the pipes

the pipes

are calling!

http://www.youtube.com/watch?v=H1iR2Wi3u5o

i think most would conclude

that property investment last few years

was the

http://www.youtube.com/watch?v=aQIxn7s3ym8...feature=related

from the rock bible

"Business man when you make your deal

do you know who you can trust?

do you sign your life away?

do you write your name in dust?

every dog has his day

its a

http://www.youtube.com/watch?v=j9AfACmIHAE...feature=related

friday night

time to eat some cat

rock on!!!!!!!!!!!!!!!!!!!!!

rock on!!!

[azogar]

rock on!

[talksalot81]

So in summary, you recommed that first time buyers plough on in at a 4 times multiple. OK, I am good with that. The problem is that, in my area, that means that the lower portion of the earners (the ones less than £25k, approx 50% of the earners), have access to a stupendous 10% of the advertised market. That very simple little piece of information should tell you something.... NON SUSTAINABLE PRICING!!!!

[HPCwhen?]

First things first, property does rise in value and will eventually double in price over time. The most important term here being “over timeâ€. ANYTIME is therefore a good time to buy

Don't agree. There is right time and a wrong time to buy property. Buying at the right time is a very good idea but buying at the wrong time....

Apart from that, I do agree with alot of your analysis but not the conclusions you draw from it. Prices will fall further so why buy now? I agree that the UU and other reports will soon be reporting drops which will be a big blow to the fragile feeling of confidence which is about at the moment. In fact, it'll be kind-of like getting punched to the floor, getting back up, dusting yourself off and then getting hit again - its way more damaging to confidence the second time around. I believe this will be the moment of capitulation that we have been waiting for so long. AFAIK I want more Daily Mail and Express headlines declaring the end of the crash - they're way too premature and they'll soon be shown up to be the completely baseless 'bull'sh1t that they are - and that'll be grist to the mill for us hpc'ers!

[yadayada]

ANYTIME is therefore a good time to buy

Sure about that?

Quick, and true, example. A very high-earning friend of mine bought a house in an upscale neighbourhood (nice estate agent speak there) of Dublin for 2.5 million euro back in summer 2006 - remember their peak came earlier than ours.

Next door is now available at 1 million euro - a significantly better house.

He could have saved 1.5 million euro by renting for 3 years- the rent would still have been much less than the stamp duty paid on his purchase.

This unnecessary excess mortgage represents approximately 50,000 per year in interest payments at today's low, low rates, and around 100,000 per year in capital repayments. (Short mortgage because he's in his 40s.)

Result - this high earner is a pauper in a nice house.

Now, was that a good time to buy?

The standard belief is that it doesn't matter as long as he intends staying for good. Of course it does.

[shipbuilder]

I can only agree with you. Listening to the podcast of Moneybox yesterday it was so sad when Keiran asked "when would there be light at the end of the tunnel" -- he had bought in June 2007 a tiny townhouse for 157k now valued at 99k. All the rampers who encouraged him should hang their heads in shame.

I have a friend in a similar position. He may never have to leave his house and my well enjoy living in it, he may well be able to afford the mortgage payments and the house may well end up being valued at £160K in the future, but over the term of the mortgage he will end up paying £120K more than he had to. The idea that it does not matter when you buy is just idiocy to anyone who considers £120K to be a large amount of money. Maybe some BTL investors are so rich that such an amount is trivial.

[yadayada]

summer 2006 - remember their peak came earlier than ours.

..and that should have been a warning to us.

[Ballymena Boy]

Sure about that?

Quick, and true, example. A very high-earning friend of mine bought a house in an upscale neighbourhood (nice estate agent speak there) of Dublin for 2.5 million euro back in summer 2006 - remember their peak came earlier than ours.

As usual most of you bears have missed the point, even though the detail is there for all to see. It’s obvious my article is designed to encourage people to use their brains when purchasing property. I am clearly talking about the BTL and first time buyers market (read my first paragraph). I emphasis the ease with which discount prices can be obtained. Yet Yadayaya talks about a person buying a single property for 2.5 million Euros. Even though (political discussions aside) its not even in the same country, it’s completely off the price scale compared to the properties I am talking about. People like him (said property buyer) are fecking idiots and deserve all they get. NO property is worth 2.5 million, not now, not in 2007, unless it’s, say, a fully renovated castle with 40 acres of land. I take it this is not the case with your friend.

I made it clear that “anytime is the right time to buy†PROVIDED you follow the simple rules. Yet you bears have conveniently “forgot†the last part of this advice and concentrated solely on the first part. My post is for sensible purchasers who can buy now for a discount, not the stupid people who pay crazy money for properties which are obviously not worth it (2.5 million guy above). I can’t legislate for that.

I also make the point abundantly clear that property ownership is long term, yet bears are fixated with the current temporary market down side. You must expand your horizons if you are to see the opportunities which are out there today.

So as to make it easy for you bears to understand, let’s take an example:

Question "should a FTB who sees the house of his dreams (at 40% discount to 2007 prices) purchase in today’s market". His finance is secure and his LTV is 70% and his total loan is 3.5 times salary. In addition he managed a 10% discount on the property price, as there were no other takers in the market "scarred off by the “profits of doom†(BB and the like). The answer is obviously YES, FTB should buy. They can secure the house of their dreams, with the added bonus of a low fixed interest repayment for a number of years. They will reap the financial and emotional benefits enormously over the next 10 to 20 years (following my advice). Or, on the other hand should they wait and try to get another 5%-10% property price drop (bears advice). If they wait till the market bottoms out (as suggested on this site many times) they will as they say “miss the boatâ€, as no-one can be really sure when the bottom is reached till we are actually past that point. In addition (if they wait) there is a very good chance that their dream property will be lost to another bidder while they “wait in the wings†for a price drop. They (FTB) will then wait still further (as they are pissed off their dream property is sold) and end up bidding (post bottom of market) on another property which may or may not be as good as their original dream place. However by that stage, other people will be back in the market too (remember the Sheeple effect). FTB will be outbid on a few properties and then will eventually succeed in purchasing a property. However due to the fact that other people are now bidding, the agreed sale price will be pretty much up at the asking price, which means FTB will get NO discount whatsoever. They will probably, have bought a property somewhere close to the price they were going to pay for their original dream property. Subconsciously FTB will always feel their purchased property is inferior to the one he originally wanted (human nature I’m afraid). In twelve years time (or whatever) when property prices have doubled, FTB will kick themselves that they waited for a 5K-10K price drop, when their dream property was practically in their grasp.

There will of course be a select few who do manage to buy on the day the market bottoms out, but most punters will be shaf--d as usual, because they did not follow my advice above.

I predict that in six years time there will be thousands of people who discuss at dinner parties and on web sites; their dream house that got away because they were waiting for a measly few grand price drop.

Is it only me who sees the irony of the current situation? Bears current greed is every bit as bad as the greed of people who bought in 2007. In 2007 people bought expecting the market to rise 10% in a year, yet in 2009 bears are not buying for the sake of a 10% price drop in the next year. It’s actually the same greed in reverse order.

If you are a FTB with reasonably secure finance and you see the house of your dreams ………….then buy the fecking thing.

[azogar]

..../....

There will of course be a select few who do manage to buy on the day the market bottoms out, but most punters will be shaf--d as usual, because they did not follow my advice above.

..../.....

were you not advising to buy last year as well

[Ballymena Boy]

were you not advising to buy last year as well

The advice (economic fundamentals) on purchasing are exactly the same as last year although the discounts you can get are different.

[gordyjuly23]

I am a FTB and recently converted bear once I had the term explained to me. You are talking absolute rubbish.

I have the finance in place for a mortgage, and a small deposit built up and you want me to buy now?

Lets take an 80k property for example.

You say property is still likely to fall 10% so that will eventually be 72k in your eyes.

At 80k I would be confident of bidding around 70k and getting the property in the current market and this is the basis of your whole argument it seems. Bid now as the future price will be same if you negotiate now.

You miss one key point though. In the future the former 80k property is now listed at 72k. I havnt started to negotiate prices yet. I would now be looking at having a bid of 65k accepted and that is me being generous. The amount of property still to come on the market will drag prices down further. Simple economics states that an increase in supply will normally bring the value of a product down.

So we have my assumed price of 70k now or 65k in the future. Even a 5k saving for a FTB will be worth every penny. They can spend that 5k on furnishing their new home. Also the added time to wait for the market to bottom out should allow for them to build a bigger desposit too helping them even more.

[kenzoil]

Question "should a FTB who sees the house of his dreams (at 40% discount to 2007 prices) purchase in today’s market". His finance is secure and his LTV is 70% and his total loan is 3.5 times salary. In addition he managed a 10% discount on the property price, as there were no other takers in the market "scarred off by the “profits of doom†(BB and the like). The answer is obviously YES, FTB should buy. They can secure the house of their dreams, with the added bonus of a low fixed interest repayment for a number of years. They will reap the financial and emotional benefits enormously over the next 10 to 20 years (following my advice). Or, on the other hand should they wait and try to get another 5%-10% property price drop (bears advice). If they wait till the market bottoms out (as suggested on this site many times) they will as they say “miss the boatâ€, as no-one can be really sure when the bottom is reached till we are actually past that point. In addition (if they wait) there is a very good chance that their dream property will be lost to another bidder while they “wait in the wings†for a price drop. They (FTB) will then wait still further (as they are pissed off their dream property is sold) and end up bidding (post bottom of market) on another property which may or may not be as good as their original dream place. However by that stage, other people will be back in the market too (remember the Sheeple effect). FTB will be outbid on a few properties and then will eventually succeed in purchasing a property. However due to the fact that other people are now bidding, the agreed sale price will be pretty much up at the asking price, which means FTB will get NO discount whatsoever. ..., FTB will kick themselves that they waited for a 5K-10K price drop, when their dream property was practically in their grasp....

If you are a FTB with reasonably secure finance and you see the house of your dreams ………….then buy the fecking thing.

BallyB - I thought you were a pure BTL'r, but nice to see you providing advice to FTBs.. However, a few thought on your advice..

1) price drops will be 20-30% over the next couple of years (minimum) on average, so a 10% discount looks less attractive;

2) FTBs currently priced well out of the market for average properties (NI still has, according to Halifax survey no affordable areas);

3) on the basis of (2) above - how likely is it that FTBs (or anyone else for that matter) will see their 'dream' house available at a price they can afford @ 3.5 time salary?

Your talk of 'getting a bargain with 10% discounts..not available in a few years time' strikes me as the sort of Developer tosh currently doing the rounds to suck the unfortunate few into the current bear trap. I believe we've only got to the top of the biggest 'dipper' drop in NI's housing history... but that's only my view and you're entitled to yours..

I think the vast majority of potential buyers now recognise that far from being "scared off by the “profits of doom†on this sight, realise that not only were the many bears right about unsustainable market and the impending crash, but that irrespective of finance availability, the worst is yet to come. So FWIW, my view is that the only thing FTBs would gain by buying now is being slightly less worse off than those (thankfully few and far between) who bought in the boom of 2004-07 (as for the investors and flippers caught out in the mania - well as you can imagine, I've less sympathy for them ).

[shipbuilder]

As usual most of you bears have missed the point, even though the detail is there for all to see. It’s obvious my article is designed to encourage people to use their brains when purchasing property. I am clearly talking about the BTL and first time buyers market (read my first paragraph). I emphasis the ease with which discount prices can be obtained. Yet Yadayaya talks about a person buying a single property for 2.5 million Euros. Even though (political discussions aside) its not even in the same country, it’s completely off the price scale compared to the properties I am talking about. People like him (said property buyer) are fecking idiots and deserve all they get. NO property is worth 2.5 million, not now, not in 2007, unless it’s, say, a fully renovated castle with 40 acres of land. I take it this is not the case with your friend.

I made it clear that “anytime is the right time to buy†PROVIDED you follow the simple rules. Yet you bears have conveniently “forgot†the last part of this advice and concentrated solely on the first part. My post is for sensible purchasers who can buy now for a discount, not the stupid people who pay crazy money for properties which are obviously not worth it (2.5 million guy above). I can’t legislate for that.

I also make the point abundantly clear that property ownership is long term, yet bears are fixated with the current temporary market down side. You must expand your horizons if you are to see the opportunities which are out there today.

So as to make it easy for you bears to understand, let’s take an example:

Question "should a FTB who sees the house of his dreams (at 40% discount to 2007 prices) purchase in today’s market". His finance is secure and his LTV is 70% and his total loan is 3.5 times salary. In addition he managed a 10% discount on the property price, as there were no other takers in the market "scarred off by the “profits of doom†(BB and the like). The answer is obviously YES, FTB should buy. They can secure the house of their dreams, with the added bonus of a low fixed interest repayment for a number of years. They will reap the financial and emotional benefits enormously over the next 10 to 20 years (following my advice). Or, on the other hand should they wait and try to get another 5%-10% property price drop (bears advice). If they wait till the market bottoms out (as suggested on this site many times) they will as they say “miss the boatâ€, as no-one can be really sure when the bottom is reached till we are actually past that point. In addition (if they wait) there is a very good chance that their dream property will be lost to another bidder while they “wait in the wings†for a price drop. They (FTB) will then wait still further (as they are pissed off their dream property is sold) and end up bidding (post bottom of market) on another property which may or may not be as good as their original dream place. However by that stage, other people will be back in the market too (remember the Sheeple effect). FTB will be outbid on a few properties and then will eventually succeed in purchasing a property. However due to the fact that other people are now bidding, the agreed sale price will be pretty much up at the asking price, which means FTB will get NO discount whatsoever. They will probably, have bought a property somewhere close to the price they were going to pay for their original dream property. Subconsciously FTB will always feel their purchased property is inferior to the one he originally wanted (human nature I’m afraid). In twelve years time (or whatever) when property prices have doubled, FTB will kick themselves that they waited for a 5K-10K price drop, when their dream property was practically in their grasp.

There will of course be a select few who do manage to buy on the day the market bottoms out, but most punters will be shaf--d as usual, because they did not follow my advice above.

I predict that in six years time there will be thousands of people who discuss at dinner parties and on web sites; their dream house that got away because they were waiting for a measly few grand price drop.

Is it only me who sees the irony of the current situation? Bears current greed is every bit as bad as the greed of people who bought in 2007. In 2007 people bought expecting the market to rise 10% in a year, yet in 2009 bears are not buying for the sake of a 10% price drop in the next year. It’s actually the same greed in reverse order.

If you are a FTB with reasonably secure finance and you see the house of your dreams ………….then buy the fecking thing.

You're right, the FTB should probably buy their 'dream' house if it is 3.5 times salary. Unfortunately the current average is 4.2.

As for your point about greed, I would say that the greed that pushes up prices and ends up in the situation many are now in is rather worse than simply waiting for a reasonable price for a home, wouldn't you say?

[nemesis]

Question "should a FTB who sees the house of his dreams (at 40% discount to 2007 prices) purchase in today’s market". His finance is secure and his LTV is 70% and his total loan is 3.5 times salary. In addition he managed a 10% discount on the property price, as there were no other takers in the market "scarred off by the “profits of doom†(BB and the like). The answer is obviously YES, FTB should buy. They can secure the house of their dreams, with the added bonus of a low fixed interest repayment for a number of years. They will reap the financial and emotional benefits enormously over the next 10 to 20 years (following my advice). Or, on the other hand should they wait and try to get another 5%-10% property price drop (bears advice). If they wait till the market bottoms out (as suggested on this site many times) they will as they say “miss the boatâ€, as no-one can be really sure when the bottom is reached till we are actually past that point. In addition (if they wait) there is a very good chance that their dream property will be lost to another bidder while they “wait in the wings†for a price drop. They (FTB) will then wait still further (as they are pissed off their dream property is sold) and end up bidding (post bottom of market) on another property which may or may not be as good as their original dream place. However by that stage, other people will be back in the market too (remember the Sheeple effect). FTB will be outbid on a few properties and then will eventually succeed in purchasing a property. However due to the fact that other people are now bidding, the agreed sale price will be pretty much up at the asking price, which means FTB will get NO discount whatsoever. They will probably, have bought a property somewhere close to the price they were going to pay for their original dream property. Subconsciously FTB will always feel their purchased property is inferior to the one he originally wanted (human nature I’m afraid). In twelve years time (or whatever) when property prices have doubled, FTB will kick themselves that they waited for a 5K-10K price drop, when their dream property was practically in their grasp.

There will of course be a select few who do manage to buy on the day the market bottoms out, but most punters will be shaf--d as usual, because they did not follow my advice above.

I predict that in six years time there will be thousands of people who discuss at dinner parties and on web sites; their dream house that got away because they were waiting for a measly few grand price drop.

Is it only me who sees the irony of the current situation? Bears current greed is every bit as bad as the greed of people who bought in 2007. In 2007 people bought expecting the market to rise 10% in a year, yet in 2009 bears are not buying for the sake of a 10% price drop in the next year. It’s actually the same greed in reverse order.

If you are a FTB with reasonably secure finance and you see the house of your dreams ………….then buy the fecking thing.

Is this some sort of competition to see how many times you can use the word "dream" in a post? I thought we had long since heard the last of that c**p. Hard to believe there is anyone left trying to sell the old story. I guess things must be pretty desperate in Ballymena now when your sitting on a load of property you bought in the bubble and can't shift it! Come clean - if you followed your own advice in the past you must be in a real panic now. As for a future predicted fall of only 5-10% - you'll be lucky!

[azogar]

The advice (economic fundamentals) on purchasing are exactly the same as last year although the discounts you can get are different.

so (to paraphrase you) anytime is a good time to buy based on the 'economic fundamentals'; therefore, if I wait another year and maybe buy at 10% less, this is irrelevant because buying now in late 2009 or in late 2008 (at c.10-15% more when you first proposed your strategy) are all ok in the long-term?

[redprince]

This really boils down to 2 simple things:

1.It is generally accepted that property has substantially further to fall - certainly the general consenus on here suggests that (and i a agree) so by waiting you will get a better deal

2.prices are not imho going to recover quickly and depending on your circumstances ( i am a potential cash rich first time buyer currently unemployed)

its better to wait until floor is reached because as one EA agreed with me there is going to be NO quick recovery this time

However if you can afford it and aren`t bothered about paying more now than what the average property is worth (as is the case in most of resale market currently) then buy.

We are all different and have different circumstances,needs and perspectives.

I am renting because NI property has a lot further to fall yet and i live in Ballymena area and even the EA`s ispoke with would concur esp when looking at the £250k + side of market which they cannot value right now.

How many people will be bidding up the market in 1-2 years time with the necessary deposits?Precious few in my opinion.

Cash is very most definitely king these days and there is very little of it about.

[talksalot81]

I love the way ballymena boy has scan read 2 lines from every response and then posted a load of nonsense which has in fact been discussed on the other lines which were conveniently ignored.

[Belfast Boy]

I predict that in six years time there will be thousands of people who discuss at dinner parties and on web sites; their dream house that got away because they were waiting for a measly few grand price drop.

Well if you look at the comparitively small UK housing bubble in the 1990's it took 7 years to reach the real inflation adjusted bottom in house prices. That is a well documented fact! If history repeats then in 6 years we should be just starting to see house prices rising slowly. So you may actually be right on that one. However, this was a much bigger bubble and will probably take longer to reach bottom.

Is it only me who sees the irony of the current situation? Bears current greed is every bit as bad as the greed of people who bought in 2007. In 2007 people bought expecting the market to rise 10% in a year, yet in 2009 bears are not buying for the sake of a 10% price drop in the next year. It’s actually the same greed in reverse order.

That is one of the most stupid things you have come out with so far. So wanting to buy an affordable home, is greedy? Refusing to take on massive personal debt, is greedy? Waiting for prices to return to normal, is greedy?

If you are a FTB with reasonably secure finance and you see the house of your dreams ………….then buy the fecking thing.

Why are you so keen to get other people into massive debt? You really think that anyone who was smart enough to find this website is going to be stupid enough to listen to your advice? ...dream on...

Edited September 6, 2009 by Belfast Boy