My wife and I are first-time buyers and went sale agreed on a property in Sandyford recently. There was another bidder involved and, following some back and forth, our's was the successful bid – just above asking price (1.5 per cent over) but still below our upper limit. So we were pleased.
However, given the current circumstances and inevitable recession we are wondering if this is a crazy time to be taking such a huge financial step. We are both in steady full-time employment but worry we may be paying over the odds considering what is likely to happen prices in the coming months.
On the flip side we have been living in our current one-bed apartment for approximately 18 months longer than we would have liked so the prospect of staying much longer isn't enticing, not to mention having to potentially go through the mortgage approval process again (we have an "exception" mortgage so I don't think a simple mortgage extension is possible).
We also really like the house and got it at a more reasonable price than expected because all public viewings were cancelled, resulting in less than 10 parties actually getting in to see the place.
In these uncertain times, it is understandable that you may be apprehensive about the purchase of your first home. While the immediate future for the property market is uncertain, it will probably be six to 12 months before the full impact of Covid-19 becomes apparent.
The market may experience a short sharp shock that may result in house prices dipping for a 12-24 month period or we may experience a more prolonged recession.
While the short-term future is unclear, I would ask yourself if you plan to make this your home for 10 years or more. You are not buying this house as an investment but as a family home and while house prices may drop in the short term, they will undoubtedly rise over a longer period of time.
If you like the house and have outgrown your one-bedroom apartment, then it may be time for you to take the next step. House prices will always rise and fall but over a longer period of ownership, it usually balances out.
The alternative of course is to adopt a wait-and-see position and hope that house prices will drop enough to provide you with a significant enough saving on the house purchase price to compensate you for the additional rent paid and the possible inconvenience of staying in a small apartment.
- Paul Stack is a registered valuer and a member of the Society of Chartered Surveyors Ireland scsi.ie