No one can predict the property price register. However, in this article, we outline the reasons you you should(‘nt) buy a house
House prices, mortgage terms, interest rates and more boring property price register terms.
Before we begin, let me pose a question,
In 10 years, will the property price register:
- decrease 50%? or
- double 100%?
No one can answer but if i have to choose one, my guess is that they will double in price. History doesn’t repeat itself, but it does rhyme.
If a house is affordable to you, understand that the property price register may go down by 50% or it could double.
Sure it is painful to buy at the top, but if you are not selling, it doesn’t matter, right? What matters, is that you can repay the mortgage. Interest rates may go up, which will increase your payments, so you need to keep a buffer.
Providing you can meet the payments then don’t rule out buying a house
Also, use a mortgage interest calculator to check what the payment would be if the interest rate was 5%, 10%, 20% interest. An interest rate increase it might not happen, but it might.
By all means keep an eye on the Property Price Register Ireland.
However, if you plan to buy at the bottom and sell at the top, you need to change your strategy, as you may be waiting a long time for the bottom
Crashes supposedly take place every 7 – 10 years
So we are well overdue one. The last crash was more than 10 years ago. The longer it goes on, the bigger the crash. But by waiting, you are not making your money work for you.
Consider also, that you could wait for a crash, which may happen in 1 year, or 10 years or 30 years. However, if you buy now, and a 50% crash takes 30 years, you’ll have your house paid off by then. So each month you wait, is a months mortgage that you could have paid off.
If when there is a crash, there may be an interest rate increase
When times are good, interest rates are low, money flows freely, money is borrowed, this money is used to buy properties. When there is a crash, money is tight, money is not loaned out. Generally speaking, a crash, leads to interest rate increases.
If interest rates double, after a crash, then a €100K mortgage, with a 10% interest rate, is not so different, than a €200k mortgage, with a 5% interest rate.
There is one very, very biiiiiiiig, important caveat though… The sooner you buy, the sooner you start paying off the mortgage. So a €200K mortgage @ 5% interest now (pre-crash) may be a better buy than a €100K mortgage @ 10% starting in 5 years time (post-crash). You’ll also have somewhere to live for the 5 years interim period.
Consider, that houses may not have gone up as much down the country. You don’t have to move 5 hours away, but you could move 1 hour out of Dublin. As a Dub, I can tell you that it can take 1 hour to get into the city centre from parts of Dublin some days. So if a house was €100K, is now €150K (a 50% increase), versus a house that was €200K, now €400K (a 100% increase), then opt for the cheaper increase – less of a fall if things go sour.