There is very much a hard-wired Irish mindset that owning a property is better than renting – rent is dead money, right? We have a high % of home ownership and a very high proportion of all wealth in this country is held in property ~85%. So it’s fair to say we are obsessed with it. I won’t go back to the famine or Into the West – but there are reasons.
Ownership, of course, means that at the end of the 30 year mortgage you will own the property outright, with no monthly costs, renters could face serious problems in retirement as their income falls. So there is long term security in owning a property. You don’t also have to live year to year on rental leases and be at the mercy of landlords. Your mortgage payments can now be fixed for upto 30 years so you have certainty on your outgoings. Rent can change every single year.
Now if a property had the same rental costs as mortgage costs we could have a great debate about the benefits of Buying Vs Renting. But the key fact is that the gap today is massive. Especially at the lower end of the market. If I look at a very large area such as Tallaght, I will see two bedroom apartments for sale at around the €250k mark – but the same property is for rent at €1,800 a month.
The maths on that is – and I’m going to assume you borrow the full €250k (to account for a value on your deposit). It would cost you €956 a month – the rent is virtually double! That’s over €10k cash a year in your pocket. You could buy another €250k property in cash with the savings within the life time of your mortgage ! The gap is simply too big too ignore. If you are renting, and the mortgage on the property is more than 30% lower, you should be buying. Even accounting for house price falls and the lack of flexibility, its still much more attractive to buy.