Recently, after the latest round of CSO statistics confirmed that, yes, property in the Capital is rising and the shortage of supply means that further rises are not only likely but imminent; a young man contacted me through social media. This would-be buyer simply stated his frustration “I can’t believe I’ve missed the boat again…” This is so discouraging to hear. It is not the idea of a willing buyer being priced out of the market that I find discouraging, but rather the mentality that has seeped back into buyers in recovering areas.
Conversely, potential buyers outside of Dublin are not only relieved to have escaped the boom years legacy of mortgage arrears and negative equity, they are also extremely cautious about entering the market now, even when their personal and family needs justify it. And they are right to be cautious. Market recovery, in many areas, is by no means certain. Just because property in the Capital is rising, this does not lead to a natural lift in every market. In fact, there is data to suggest that the burgeoning Dublin market, both for sales and rentals, is actually suppressing other regional markets.
If any lessons have been learnt over the past few years, there should be no more talk of missed boats, property ladders or rising tides. The most important message that I can pass on about the market is – People, there is no boat. The property market is not a one way track to wealth, although for much of the boom years we behaved as though it was. In reality, it is an infinite cycle, consisting of ups and downs. Second-guessing the market over the short-term is a pretty risky strategy and not one that I would recommend for home-buyers. If the housing needs are short-term, buying may not necessarily be the right answer – unless the question is about speculation. On the other hand, if the housing needs are for the medium to long term, then the short-term market is of lesser importance and this is where home-buyers have an edge over investors.
In this scenario, any potential buyer must determine whether they are, in fact, ready to buy. And being ready to buy is not just about money. It is about a whole range of considerations –having regard to both personal and market conditions.
If you are genuinely thinking of buying before the end of the year, sort out your finance. It is no longer to sufficient to rely on your local bank branch advisor telling you that you should be fine (yes, that really is the standard answer to any mortgage query). Instead, get your paperwork submitted and seek a letter of approval in principle. If you already hold such a letter dated more than three months ago, do request an updated letter. Similarly, if you are a cash buyer, ensure that you have proof of funds dated within the last three months. Just this week, I came across an estate agent who advised would-be buyers to submit their bank statements to their solicitor and have their solicitor draw up a letter confirming proof of funds. That seems a little excessive, particularly if you have to pay for the letter. Generally your bank will provide you with a letter – rarely via email – to confirm that your account is in funds up to a stated amount, generally the sum of your highest bid. I do not recommend sharing bank statements with the estate agent as they are simply too revealing and can work against you in times of negotiation. Also, there is nothing wrong with having funds across a few different banks, simply request a letter from each bank. Be prepared to submit this letter together with your offer as this may give you an edge over other less prepared, or less committed, buyers.
Of course, being financially able to buy does not mean that you should. Other lifestyle considerations are important. For example, are you ready to commit to a mortgage, do you have job security, is a career change on the cards, is your family situation due to change? Nothing says “let’s move” like competitive school catchment areas.
Another big consideration for potential buyers is the desired area. The market as a whole has not levelled out as yet, and is unlikely to do so for another while as the over-hang of apartment stock and poorly appointed new houses continue to distort the market. However, we do know that the shortage of family homes in certain areas is not a myth or creation of the media. In order to assess your immediate area, you must try to determine local demand versus supply or over-supply. The National Property Price Register will be an invaluable tool for this. If your research confirms that prices locally are still vulnerable, buying below current market value might be a strategic alternative to waiting. Not every seller is open to this, however, I would suggest that too many sellers in the market are not deserving of the title. They list their property for more than it is worth and they are not willing or perhaps, not in a position to accept less. If you find yourself dealing with such a seller, walking away might just be the right move.