Is it cheaper to buy than to rent?

Is it cheaper to buy than to rent?

Is it cheaper to buy than to rent?Recent reports reveal that the rental market is showing, albeit small, signs of stability. To the delight of some landlords, good quality rental property is in demand and rent rates have slightly but steadily increased since December 2009.

With this recent news, the worthy discussion on whether to buy or to rent has raised its head once again.In terms of asking prices, property is now a lot cheaper than during the Celtic Tiger reign and house prices are a lot more attractive now than three years ago. Commenting on the latest rental reports, PIBA, the country’s largest group of independent stock brokers said… “While it remains to be seen if the latest rental figures become a trend, nonetheless, the reality is that rental and house prices are now very closely aligned.”  For example; “Nationally, the average house price is €213,183. Monthly repayments over 30 years on a 2.65% variable rate mortgage, based on a 90% LTV would be €773 while the average monthly rent nationally is €765”.

On the flip side, while Interest rates are historically low, the situation could be dramatically different in coming years. Along with rates, there is a new property tax waiting in the wings and the planned abolishment of the mortgage relief by 2017.

Have Your Say

  • Is it now cheaper to buy than to rent
  • And if so, how easy is it to secure a loan?
There are 18 comments for this article
  1. Pete at 1:30 pm

    There are some good arguments for renting here (particularly the low interest rate one) and most are valid.

    But the main reason i bought is for my retirement. By the time the 80s Baby Generation retire the public pension will be minimal and i didn’t want to be forking out a grand a month (inflation equivalent) on rent. I know by the time i retire that will be one cost that i won’t incur.

    Added to that, i know that if i pass away, before retirement, my wife is secure with our Life Assurance on the house and i get to pass on an asset to my children.

    Not everything is about now.

  2. Townhomes Buyer at 1:46 pm

    The homeownership rate in the U.S. is nearly 69 percent — indicating that homeownership is within reach for more Americans than ever before. In fact, it can be as affordable as renting, and in some regions of the United States, it can be more affordable. The following are some of the advantages of owning a home rather than renting. You can build equity; this means your wealth will increase as you gain more home equity. You can gain tax advantages, because mortgage interest is tax deductable. A home provides a permanent place where your family can live and grow, and you can decorate or expand a house the way you like to create your dream home.

  3. Ken at 1:23 pm

    Laura you say you have the deposit/incomes to buy a house and then say you won’t buy ? but in the same paragraph you complain that the banks are not loaning..?? I assume you can’t get a mortgage? Quit complaining and waiting for your ‘dream’ home to come on the market for tupence-ha’penny – because IT WON’T…if you have the ability to repay a mortgage, have the deposit and secure employment there is no reason why a bank won’t loan you the money unless you are not meeting some criteria…look will of course not get 10/20 times your salaries like those poor folks before you, therefore it’s unlikey you’ll be able to buy that 6-bed 3000sq.ft. house in a leafy suburb or on a few acres..because the banks are cutting back on multipliers.. buy what you can afford, if you need a house, then you’ll find a way.
    my opinion is that it’s better to buy now, cheaper to rent now, but renting is like burning money as houses are very reasonably priced now and unlikely to dip much/if any further this year.

  4. Pete at 6:48 pm

    God love you laura for your innocence. You thought Cowen helped out the banks for our sakes? Cowen and the rest of those crooks in FF including saint lenihan have’nt lifted one finger to help the people of this country. They scrambled to save their own necks (and paycheques) first and then their friends the bankers and builders/developers next and they’re still doing it. In the meantime all of us mugs who have had to endure huge paycuts are delighted to see the staff at Anglo Irish bank, possibly the rottenest apple of them all getting a pay rise! The poor sods must be so worn out after giving all that money to their ceo and directors and then losing the rest thus bringing down the bank that the sheep (us) had to be fleeced to bail them out, of course they need a payrise to compensate. Banana republic how are ye!

  5. Dan at 1:22 pm

    The question isn’t really relevant.

    Where are you supposed to conjure up the deposit from in these times?
    I have mortgage approval, but unless they come up with a system to get around the deposit needs, I won’t be buying for a loooong time.

  6. liam at 1:06 pm

    Michael’s comments are typical of the negative attitude of Ireland today. Even in his most pessimistic moment he was correct the logic of buying your own home for less than you could possibly rent for is sound. In 20 years you own the property, you have something to leave your family and when you end up on the Old Age Pension at least you will have a roof over your head.
    The Banks and the Government are the problem they instill no confidence and they are both strangling any hope that people might have.

  7. Laura at 1:24 pm

    I am in a position to buy. I have the deposit. My husband and I have great incomes and no debt. But I will not buy at this time. I don’t trust the economy. I certainly don’t trust the government and I most definately don’t believe the prices of the shoe box homes I have looked at are in any way realistic. The sellers still have some unrealistic opinions of what their homes are worth. Probably urged on by the estate agents that robbed people of their money during the boom when all they had to do was shuffle paper to sell a property.
    As far as the banks not loaning money. Wake up Mr. Mortgage lender that big bale out cheque Cowen and his cronies gave you was OUR money!!!
    If someone has the money, job and ability to buy a house they should be loaned the money. I thought Cowen helped out the banks for our sakes? Well where is Cowen now when you have decent people trying to buy a home and can’t because all the money WE gave to these banks they are just hoarding?

  8. Brendan at 11:06 pm

    GET REAL. Anyone who listens to the radio knows that we can expect Intrest rates to reach 6% within the next 24 months when the added risk for lending to IRELAND is included and if they don’t it is because the european economy has slipped back into recession.(which will further reduce house prices here) When you include for new taxes it is economic SUICIDE to buy in the present market. Rent is cheap compared to what property owners are, and will continue, to lose on residental investments.

  9. michael at 4:40 pm

    Anyone who buys would be mad. This recession is worse than 1929. Ireland will follow Japan and it will be 20 years before prices come back to anything near what we paid in 2006. The government and its appointed regulators have failed us badly.

  10. David at 12:52 pm

    Banks won’t part with the taxpayers money that was pumped into them. I’m a civil servant with a steady income and I can’t get a loan for a house. And if I can’t get get a mortgaga, what chance have others?

  11. Anne at 12:51 pm

    We are renting a 3 bed semi in a quiet estate in the midlands for €350 a month. You’d find it hard to find a house with mortgage payments at that low. At Christmas when the heating broke we rang the landlord & he sent a plumber out. We didn’t have to pay for him so we were up money again!

  12. David at 12:50 pm

    There might be thousands of cheap(er) houses for sale now but the banks are holding onto their (ie our) recapitalisation money and will not lend. I want to buy but while I’m in full time civil service em ployment, I can’t get a loan. Makes you wonder if anyone can if the banks won’t lend to the likes of me!

  13. mary at 12:40 pm

    The difference appears to be minimal but I would be concerned about interest rates rising dramatically in the near future & also abolition of MIRAS would concern me. I think it would be preferable to rent for now. However, I own my modest home in the country & would not like to be starting the whole house buying process again.

  14. Daniel at 12:37 pm

    Mortgage repayment is only part of the cost of ownership; to get the whole picture all costs should be exposed.

    1. over how many years is the mortgage, 20 is good but 35 is a disaster.
    2. is the interest rate fixed for the length of the mortgage? In Ireland most probably not, meaning a huge unknown risk that has to be carried by the house buyer.
    3. How much cash is tied-up in the deposit?
    4. Costs such as stamp duty and fees do not add any value to the house and can not be recovered on re-sale.
    5. Maintenance and refurbishment costs about 1% of the value of the property per year (kitchen, bathrooms, heating, windows, etc. all need to be replaced over the years and must be allowed for in the big cost picture).
    6. When you buy you loose the freedom to move easily should you get a much better job in another area or be forced to move due to unemployment
    7. The house market is going down and should continue to do so until realistic prices are reached. These prices are not related to disposable income and not the inflated prices paid during the boom years when a house was an investment that just happened to be a roof over the investor’s head.

    In conclusion, it is currently a far better deal to rent than to buy – don’t get caught by buying a property at still over inflated prices. And if you do, don’t expect the long-suffering tax payer to bail you out also!

  15. Marie at 12:15 pm

    It may be cheaper to buy than to rent, but the reality is the banks are not giving out mortgages

  16. Me at 12:14 pm

    I am currently paying rent on a 2 bed apt at €975.00 a month. This is a reduced rent! I am looking at buying a 2 bed apt in the same development and my monthly mortgage repayments would be €523.00. However, securing a home loan is a major issue, even though I am in full time secure employment!!

  17. Jennifer Farrell at 12:07 pm

    I have currently bought a 2 bedroom property in my local area Donnycarney and will paying a mortgage of 666.00euro per month. My sister is renting a property in the same area and is paying rent of 1000.00euro per month.

    • Ja at 11:39 am

      House prices are still too high. Look at Europe and don’t fall for the Irish estate agent rubbish about “new affordability”. Until vendors accept that
      a) Its not 2006 anymore and
      b) We will not buy over-priced rubbish
      the market will stay in limbo.
      Long live renting, the “dead money” argument has been laid to rest.

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