Let’s tackle the big question right away: why buy a house when you could rent?
The answer for me is simple: for the amount of money I pay for rent, I could pay a mortgage. But let’s make a list, because everyone loves lists!
1 - RENTS IN THE DUBLIN CITY CENTER ARE VERY HIGH AND THEY HAVE NOW REACHED A PEAK.
If you consider that a single room, in the city center, might cost up to €600 - 700 per month, paying a monthly mortgage instalment of €800 (or less) it’s not a such a big leap. And of course the monthly instalments depend on the mortgage term: the longer it is, the lower the monthly instalment.
The forecast for 2015 is that rents in the city center will start to ease, as the inflation spreads out to the commuter counties around Dublin: the reason why rents were going up, is because of lack of supply (low number of suitable apartments and houses available to rent), and this has pushed renters to look outside of the city center, hence increasing the demand in the suburbs.
While it is true that rents might ease, or even decrease in the near future, in the most positive of scenarios, you would still pay €450 - 500 /mo. Here's a great article for more information, be sure to check out the 'Daft Rental Report' mentioned.
2 - THE IRISH PROPERTY MARKET IS PICKING UP SPEED ONCE MORE, FOLLOWING A 1% FALL IN THE FINAL THREE MONTHS OF 2014.
While the prices are still relatively affordable (mainly thanks to the new Central Bank regulations), they are slowly increasing, especially in Dublin where the property market follows its own rules. According to the latest Daft report, "the average asking price for a house in Ireland grew by 4.6% in the first three months of 2015 [...]".
This seems to be the best time to start searching for a property to buy, as prices will continue to steadily increase. If you wait a couple of years to buy a house, you might need to settle for less than you’d like.
3 - WITH THE NEW REGULATIONS PASSED BY THE CENTRAL BANK, FIRST TIME BUYERS ARE ADVANTAGED WHEN BUYING PROPERTIES.
Check this article from the Irish Times: "Banks are now able to lend first-time buyers 90 percent of the purchase price up to a value of €220,000 and 80 percent on the balance."
Unfortunately, we can't be considered first-time buyers, as my partner already owns a house (both partners need to be first-time buyers for the new incentives to be valid). However, the new regulations will discourage second-time buyers (who might decide to wait before joining the house hunt) and the house prices might stabilize around €220,000, to meet the criteria for first-time buyers.
This only goes to our advantage: less competition, and, as a young couple of professionals, €220,000 matches perfectly our budget!
4 - YOU CAN RENT A ROOM IN YOUR HOUSE TO A PRIVATE TENANT AND THE RENTAL INCOME YOU EARN, WILL BE EXEMPT FROM INCOME TAX, IF IT DOESN'T EXCEED €12,000/YR.
Not only you won't be wasting money on rent, you’ll also be earning money, which can go towards extinguishing the mortgage sooner. Once the mortgage is extinguished, this can continue to be a handy source of income.
Visit the Citizen Information page on 'Renting out a room in your home' for more information.
5 - YOU CAN CHOOSE YOUR HOUSE / FLATMATES!
Yesss. You will be the supreme overlord, not to mention that you’ll be able to keep pets, have guests and own your cutlery (small victories are important too).
Everyone who rents or has rented, at some point or another, has horror stories about their flatmates / roommates. And who wouldn't relish the chance to finally be able to choose a nice (sane) flatmate, or have the option to boot them out if they turn out to be too.. 'interesting'..
Going back to the 'pets-allowed' benefit, while not all apartment complexes have rules about prohibiting pets, most landlords won't allow them. And if you are an animal lover like me, being able to share your living space with your pets is very important.
6 - IF YOU DECIDE TO MOVE AWAY, YOU CAN ALWAYS SELL THE PROPERTY.
The risk of losing money on your investment is very low, and, even in the worst case scenario where there is another financial disaster, you can always rent the entire property until better times come along.
Dublin's property market is still shamefully poor of new developments, and while there are rumors that this will improve in the future, a quick search on MyHome.ie shows astronomical prices for new houses. At the time of this search, only 8 of the listings are under €300,000, and, of those, only 1 is under €200,000.
Therefore, there should be no fear that a second-hand property, in good condition, won't be desirable on the market.