Obsession - englightenment please!

Calina

gazzer wrote:

One of the main reasons for buying a house I would have thought is that when you retire you have the mortgage paid off so you dont have the worry of streching out your weekly pension to pay for somewhere to live. If you are still renting the money left over in your pension after paying your rent wouldnt go very far.

that is because the rental market is not particularly well regulated here. You'll note it's not a problem in places like France, Belgium and Germany where in fact, the rental market is properly regulated.

Sponge Bob

Calina wrote:

Freimann? - they sound awfully familiar to me....

like these http://www.walkermodular.com/s-series.html

and like a lot of things in Germany it made perfect sense, but only when you saw it

Moonbeam

Do social services cover peoples rents on pensions there?

What does regulation have to do with old people needing to pay rent?

hmmm

gazzer wrote:

One of the main reasons for buying a house I would have thought is that when you retire you have the mortgage paid off so you dont have the worry of streching out your weekly pension to pay for somewhere to live. If you are still renting the money left over in your pension after paying your rent wouldnt go very far.

That's assuming that you are spending the money you are saving by not paying for a mortgage. I rent for about third of what a mortgage would cost me, and I invest the difference. I know where I'd rather be stresswise in my life with a large bank balance, substantial investments and no debts, rather than a 500k mortgage I can barely afford and ECB rate rises hanging over my head.

seamus

The rental issue I think has been the big one in recent years. In Ireland, renting has always been seen as a stopgap solution. A temporary, insecure solution. This isn't helped much by the legislation, and landlords' attitudes.

If you're renting a place you can expect;
1. To not be allow add any fixtures of your own - Mirrors, pictures, speakers, etc etc. This is not a big deal at all on the continent, where such minor alterations are expected of tenants
2. To wait quite a long time before your landlord repairs any problems or even returns your calls. Some are good, but many are abysmal, including agencies.
3. To get a short-term lease or no lease at all, even if you plan on staying a long time. You can be (and are surprisingly likely to be) turfed out on your ear with a month's notice, even if you're renting a four-bed home with your entire family and belongings in it.

There are a couple of other issues with renting. Culturally, Irish people don't respect the rich guy. Irish people begrudge the rich guy, and if you're a tenant, then your landlord is "the rich guy", and the Irish feel like they've been screwed over, or that they're hard done by if they're personally giving a siginificant amount of money to that guy.

There is also the boom. Within the last five years, mortgages have been relatively cheap, but rents have been relatively stable. So most people reasoned (quite validly), that giving someone €1,000 in rent every month was stupid, when they could buy a similar property for €300 more per month, and expect massive capital appreciation. They could even get a renter in themselves to take a room and cover that €300 extra.

We should expect a little bit of a shift in this attitude over coming years. It's a matter of doing the maths. I wrote a big post a few months back about the deadness of rent money. That was valid at the time. The market is a little different now.

Look at it this way;
Imagine you have the option of buying a house with a 35-year mortgage of €350,000 at €1,500/month, and expected house price inflation of 3% per year over the next five years. The first few years of your mortgage, you are paying off interest not capital, so we'll say that of the €1,500, you'll pay off €100 per month of the capital over the next five years.

You also have the option of renting an identical house for €1,100/month, and saving the extra €400 per month in a savings account that will give you 3.5% per year over the next five years.

The maths seems obvious, but if you work it out;

Buying;
Initial outlay: €350,000
Price after five years @ 3% growth: €406,565
Total money paid: €90,000
Total capital paid off: €6000
Total owed: €344,000
Cash return after selling home: €62,565

Renting:
Total Rent paid after five years: €66,000
Total Savings after five years: €24,000
Compound interest on savings @ 3.5%/year: €2,262
Value of savings: €26,262

Now this looks bad for the renter. But 3% is relatively strong house price inflation. If this drops to say 1%, then after five years you're left with ~€23,000. If this doesn't move, or becomes negative, then you're in serious trouble.

talkingclock

Moonbeam wrote:

Do social services cover peoples rents on pensions there?

no, not in germany. but renting a 2 bedroom flat, (50sqm) in my hometown would cost approx 240.- (ex electricity, heating etc) in the city center. It's quite affordable considering that average pension is (roughly) about 1000 EURO and cost of living in general is very below the Irish.

If the pension below a certain level social service will pay the rent for a adequate flat (which means not 3 bedrooms for a single lady).

Moonbeam

You home town looks lovely btw,

A 2 bed apt in Dublin city centre would be more 1500pm

State Pension is 1000euro pm? thats alot higher then here.

bk

hmmm wrote:

That's assuming that you are spending the money you are saving by not paying for a mortgage. I rent for about third of what a mortgage would cost me, and I invest the difference.

But you see that is the thing the vast majority of Irish people wouldn't invest the money.

If you rent and the money you save you invest wisely in stocks and pension, etc. and you make a good return then there is absolutely nothing wrong with renting.

However the vast majority of Irish people aren't capable of doing that. Instead in the best circumstances they stick it in a bank account where it matches inflation or worse loses value. Or even more likely most Irish people would probably just spend the money on drink, skiing holidays, cars, etc.

For many of these people, buying property is like a forced savings scheme and is actually good idea. I know a few people who couldn't save or invest to save their lives, but when they bought a house they had no choice but to change their spending habits. When they get to retirement age they will be in a much better and more secure financial situation then if they hadn't.

talkingclock

Hello all,
thx for your input. Much appreciated!

TC

steinbock

I rented for years in Germany and over there the landlord can also require you to leave a property if they want to move in or a member of their family is moving in to the property. Although the tenant laws there are obviously better than here I still found renting to a similiar experience generally.

Attitudes to buying houses I think is just a cultural difference between here and the continent. Personally I think there are many intangible advantages to owning a property as opposed to renting.

One thing, if 80% of Germans rent, who owns all these places? The other 20%?

iguana

talkingclock wrote:

I have a 21 year old colleague here and he is talking about nothing else then if it would be better buying a house or a flat with his fiancé. FFS he's just 21! He has his full life in front of him and doesn't know what's going to happen in 5 years with his job or the Irish economy...He has to repay his mortgage for 30yrs!

Yes but by the time he is 51 he will never have to pay another penny for his house ever again. With life expectancy rates rising all the time in the west that could easily have half his life still ahead of him and he will own his own home 100% and never have to spend another penny on it. Then when he and his partner dies his children should he have any get a big lump sum. Or he could downsize, buy a smaller place and spend a big lump sum. With renting you pay out until you die and then your children are left with nothing.

I worked out last night that my house in London, which I bought 8 months ago at the age of 27, has risen so much in value that if I were to sell it now I could use the equity to purchase a slightly smaller house in parts of Dublin mortgage free. We have doubled our initial investment and have had a great house to live in. And with house prices in this part of London expected to boom over the next 5 years. (Close enough to the Olympics to benefit, not close enough to impact negatively on my quality of life). And Dublin expected to slow I suspect I will be in a position to own my own home in Dublin (in a part I want to live in) 100% by the time I'm 33.

Afuera

iguana wrote:

Yes but by the time he is 51 he will never have to pay another penny for his house ever again. With life expectancy rates rising all the time in the west that could easily have half his life still ahead of him and he will own his own home 100% and never have to spend another penny on it. Then when he and his partner dies his children should he have any get a big lump sum. Or he could downsize, buy a smaller place and spend a big lump sum. With renting you pay out until you die and then your children are left with nothing.

I worked out last night that my house in London, which I bought 8 months ago at the age of 27, has risen so much in value that if I were to sell it now I could use the equity to purchase a slightly smaller house in parts of Dublin mortgage free. We have doubled our initial investment and have had a great house to live in. And with house prices in this part of London expected to boom over the next 5 years. (Close enough to the Olympics to benefit, not close enough to impact negatively on my quality of life). And Dublin expected to slow I suspect I will be in a position to own my own home in Dublin (in a part I want to live in) 100% by the time I'm 33.

Time for a reality check...

While the 21 year old could be mortgage free by 51, the chances that the first property they buy will actually will be adequate for their needs during all those years is a bit dubious. They will most likely have to trade up and undertake more debt before they are able to attain the house they really want. Also I think it's slightly dishonest to suggest that they wouldn't have to pay a penny on the property ever again, even if they were mortgage free. Maintenance and insurance costs will all have to be kept up and I wouldn't doubt that in 30 years time the government will have already introduced a property tax like most other European countries.

In the long term buying usually will win out over renting, but there's really no guarantees. Also I suspect that the amount of people that will manage to reach the ripe old age of 102 will be well in the minority.

As for your own speculations on being able to own a house in Ireland mortgage free by the time you're 33... well that's all it is, speculation. When have the Olympics ever raised the prices of properties in a host city? The games are just a showcase for the city and depending on how they are perceived they can have a negative impact as well as a positive one. Also, you make no considerations for the fact that Sterling has been repeatedly flagged as being overvalued and will most likely suffer a readjustment during the next few years. Trying to buy a property in Euros will not be so easy should that happen. To be honest, it sounds a lot like wishful thinking.

I always find it funny the way recent buyers, saddled with a large amount of debt are under the impression that they are suddenly wealthy. I guess it's understandable that you would have this outlook though since at 27 and with the previous 10 year boom you would have no recollection of a recession or house price deflation.

iguana

Afuera wrote:

As for your own speculations on being able to own a house in Ireland mortgage free by the time you're 33... well that's all it is, speculation. When have the Olympics ever raised the prices of properties in a host city?

First it's not speculation, there are houses in Clonlee, Lucan, Balbriggan and Darndale that I could currently afford mortgage free if I sold my house. And there are lots in Cork, Galway, Limerick, Waterford, Laoise or any of the other 20 non Dublin counties. I'm not speculating on future assets I'm working off the difference between the value of the house that just sold on my street and what I owe on my mortgage. I just don't currently want to live in any of those places.

And it would be stupid to sell at the start of the gentrification of the area I just bought in. Everything in Tottenham is just as sh!t as it was 8 months ago, the houses have just gone up in price by nearly 30% since then. However now that more money is moving into the area, and millions have been allocated in regeneration grants the area is about to improve vastly. And as that happens the prices will continue to rise.

As for the Olympics, one of the tube and rail stations in Tottenham being transformed into a major transport hub, to match the rise in it's use when Stansted's 2nd runway is completed. And the Lee Valley area which runs parrallel to Tottenham high rd is being updated and improved due to the Olympics. Also, while of no financial benefit to me, the Haggerstown tube line which is going to run through Hackney because of the Olympics will massively increase the value of houses along it. Don't underestimate the effect that proximity to a tube station has on houses in London. Especially when it's either zone 2 or 3. I also live far enough away from the Olympic grounds so that I won't be hit when it's over and the area immediatley around it starts to suffer, as is predicted. The Olympics themselves won't rise the price of my house, but the new infastructure it brings will.

As for property tax, what you are far more likely to see in Ireland will be something similar to council tax in the UK which is also payable by renters. And yes I remember the house price crashes in both Ireland and the UK. My parents were lucky and bought their house at the very bottom of the price trough. Prices started going up again locally within a month of their completion date. And even I didn't remember it I'm perfectly capable of researching it.

Be fair, do you think many areas in the UK or Ireland have seen price rises of 30% in the last 8 months? I did a year and a half of research before I made my move. I researched the area, the market the previous rises, 9% in 4 years, the planning applications, the heritage grant decisions, the transport improvements, the number of housing association houses locally and the lenght of their contracts, crime figures and traffic reports. The surrounding areas and the growth they've seen, the council and the local facilities. The previous house price crashes and the causes and effects. And when I was as sure as I could be I bought and I bought a house that was big enough for a family to grow up in, so I never need to upsize. I'm not an idiot who got lucky, I did a huge amount of research and so far it's paid off.

Afuera

Iguana, before this thread goes way off topic, I'd like to remind you that equity is only theoretical until you actually extract it. Only time will tell if you made a wise decision or not. You can come back to brag about it when/if you're able to cash in like you plan to.

Can you answer the OPs original question on your thought process where you decided to buy rather than rent though? You've already suggested that you plan on selling up this property in 5 years time. Do you know how much money you would you be able to save over that period if you were renting, rather than servicing your mortgage?

iguana

Afuera wrote:

Can you answer the OPs original question on your thought process where you decided to buy rather than rent though? You've already suggested that you plan on selling up this property in 5 years time. Do you know how much money you would you be able to save over that period if you were renting, rather than servicing your mortgage?

Well the obvious thought process is that rent is paid forever, a mortgage eventually ends. A freehold house is yours to do what you want with (within the law - running a crack den is a no-no in rental or owned). No-one can take it off you, at least without compensation in the event of compulsory purchase, and when you are older you can down-size and get a lump sum or leave it to your children. My dad also has an aunt in her late seventies who never bought and rents privately, she has had to move several times in the last 5 years and has no security whatever.

My mortgage is £900pm plus I pay another £100 for home insurance and ppi. The rental on a house like this in this area, 3 double beds with one of the receptions as a 4th double bed, which is the usual way these houses are rented to young professionals, goes for about £1400pm. So for a house this size I'm saving £400pm, though obviously I wouldn't rent a house this big as that would be a waste of money.

I'm not necessarily planning to sell up in 5 years, the hope is to move back to Ireland at somepoint, but if my husband's career dictates it we might easily stay here and work at reducing the term when we have spare cash. If not we will continue to pay at this rate and finish paying in 24 years when I am 52 and my husband has just turned 54. We may also move to somewhere (even) less central and buy a bigger house with a bigger garden or a simalar sized house which is cheaper due to location in order to lose the mortgage and allow me to be a stay at home mother. Or we might easily end up somewhere else entirely but either way we have choices we wouldn't have as renters. And if we're ever really broke we can rent out our spare rooms which would cover the mortgage while while we live payment free. (But I don't share well).

We rented together for 3 and a half years in which time we spent about £25,000 on rent. £25,000 on small apartments, the one we lived in longest had a patio but it also had damp that our landlord refused to treat for 13 months. The others had no outside space, we had no right to change the wall colours, choose our furniture, replace the crappy mattresses. Our house has three double bedrooms, 2 receptions a 20ft kitchen, and most importantly a back garden that we are allowed (as it is our decision) to keep our two dogs in. None of the apartments that I spent £25,000 on would even let me keep goldfish never mind two energetic springer spaniels.

Afuera

iguana wrote:

My mortgage is £900pm plus I pay another £100 for home insurance and ppi. The rental on a house like this in this area, 3 double beds with one of the receptions as a 4th double bed, which is the usual way these houses are rented to young professionals, goes for about £1400pm. So for a house this size I'm saving £400pm, though obviously I wouldn't rent a house this big as that would be a waste of money.

It appears that the dynamics of the market in the UK are completely different to anything possible in Ireland right now then. In most cases in Ireland you will be able to rent a house for about half the cost of its mortgage. It obviously makes economic sense to purchase in your case, where the comparable cost of rent is higher. Best of luck and hope it works out for you.

The other issues you mentioned are all related to tenancy rights and security of tenure which were mentioned previously. These are leglistative issues which I feel will be tackled in due course. In most other European countries pets, redecorating and security of tenure are not problems and the laws are benificial for both the landlord (ensuring more reliable long term tenants) as well as the tenants. I know in Spain that the rent can not be changed by the landlord during the length of the tenancy (typically 5 years) and if they wish you to leave they have to buy the lease out.

Moonbeam

Afuera wrote:

In most cases in Ireland you will be able to rent a house for about half the cost of its mortgage.

No you can't,
My mortgage is equivelent to what i would have to pay in rent in the same area.
It is the same for amny houses in many areas,though yes sometimes it is cheaper to rent a house it definately isn't 1/2 the price of an average(25 years) mortgage.

Afuera

Moonbeam wrote:

No you can't,
My mortgage is equivelent to what i would have to pay in rent in the same area.
It is the same for amny houses in many areas,though yes sometimes it is cheaper to rent a house it definately isn't 1/2 the price of an average(25 years) mortgage.

And when exactly did you take this mortage out? It wouldn't have been 2 years or more ago would it...
For anyone considering buying or renting in Ireland at todays prices, they will be paying about twice as much per month to buy.

soma

iguana wrote:

My mortgage is £900pm plus I pay another £100 for home insurance and ppi. The rental on a house like this in this area, 3 double beds with one of the receptions as a 4th double bed, which is the usual way these houses are rented to young professionals, goes for about £1400pm.

Assuming that these figures are true, and that this is not a 100% interest-only mortgage then..

..this example has absolutely squat to do with the situation in Ireland. Equivalent properties do not exist in Ireland (if they did - I'd be all over them like a rash) and doubly so in urban areas. The extent of the rampant asset speculation has virtually wiped out all yield on residential property, with the exception of some negligible yields using I/O and/or massive downpayments.

Iguana - if your figures are accurate, that was a great buy (regardless of appreciation since) and you'd have been mad not to buy it. Great to see someone actually doing research and their maths before buying. However, you will find nothing like this in Ireland, and this is what this thread is currently about.

soma

Moonbeam wrote:

No you can't,
My mortgage is equivelent to what i would have to pay in rent in the same area.

But when did you buy it..? This thread is dealing with the here & now.

Moonbeam wrote:

It is the same for amny houses in many areas

No it is not the same "in many areas". Perhaps in some very rural places this can be pulled off, although these examples tend be in places (such as parts of donegal) where renting one of them out for 12 months would be a challenge.

Moonbeam would you care to show me an Irish property (or even name a town) where a 25-year repayment (cap + interest) mortgage is equal to or less than the equivalent rent? [and no using 'teaser' 12-month-only rates from financial institutions ]

Moonbeam wrote:

,though yes sometimes it is cheaper to rent a house it definately isn't 1/2 the price of an average(25 years) mortgage.

I currently rent in Dublin 6 for something like 35% of the equivalent mortgage - madness.

iguana

soma wrote:

..this example has absolutely squat to do with the situation in Ireland. Equivalent properties do not exist in Ireland (if they did - I'd be all over them like a rash) and doubly so in urban areas.

Yes they most certainly do. Dublin is not Ireland. This house in Limerick rents for the same as the mortgage payments on a 90% mortgage on this house on the next street. Both are a 15 minute stroll from the city centre, so definitely an urban area. It's not a good buy-to-let investment unless you have a better than 10% deposit and are confident of a rise in property prices. But if you're looking for a home, especially one to raise a family then there is nothing that could convince me that renting is the better choice.

I know that area, and both are family estates, it's not exactly Ranelagh, but I would compare it to perhaps Kimmage. The house is under the stamp duty threshold and it's big enough to raise an average family. Plenty of people I was in school with lived in similar houses until they grew up and moved out.

Oh, and the OP asked about the obsession of Irish people, which I still am regardless of my current location. And I am hoping to return to Ireland in the next five years or so, as my husband and I want to raise our family in Ireland. As that will most likely be in Dublin the raises in value of my property are very important to me as it's the only way I can afford to buy something similar at home.

EDO

talkingclock wrote:

Dear all,

I'm German and I have a question: could someone please explain to a foreigner why Irish people are obsessed with buying houses?

I have a 21 year old colleague here and he is talking about nothing else then if it would be better buying a house or a flat with his fiancé. FFS he's just 21! He has his full life in front of him and doesn't know what's going to happen in 5 years with his job or the Irish economy...He has to repay his mortgage for 30yrs!

A lot of us from the continent (not only Germans, let's say west European foreigners) are just baffled about this determination to buy a property...

Could someone please lift the veil for me?

THX!


TC

Just to throw my two cents in on this question and very good question it is too. This Irish fixation with the property should be qualified - in that I believe it is a fixation with land - there is a subtle difference and I believe it goes way way back before the famine , The penal laws , Cromwell etc etc. I've just moved apartment and the individual who rented before me left a rake of books on Irish history - a topic I really haven’t looked at since I finished Uni a decade and half ago - so I’ve been doing a bit of reading !

One thing that really hit me was how agrarian- I mean really really agrarian Irish society has been since the records began until the last 2 decades or so of the 20th century. The vast majority of urban dwellers in Ireland are only a couple of generations off the farm. An understanding of this and the mindset that has been result of this is crucial. Land, the romantisization of land and the rural community has been at the heart of Irish culture since god knows when and still is today. What has gone hand in hand with this has been the creation of property rights and the primacy of property rights over all else that is far in excess of anything on mainland Europe today and has been Irelands (both Catholic and Protestant) main contribution to the society of the United States of America.

Nearly every Irish person I know when asked the question you have posed - will say our property fixation goes back to Faminetimes and the fact that we never owned our own property - being conqured by the Brits and we are new to the whole property owning world. I beg to differ - in fact I would say it is perversely the opposite. Of nearly all Europeans we Irish are used to owning our own land . It comes down to geography - Ireland's position on outer western extremities of the Eurasian continent gave us, like all far off communities a great liberty to do things our own way. We were never part of the Roman world, thus missed out on the great city and urban life builders of Europe prior to the Renaissance and also the primacy of an organised state to dictate and influence property rights - which could be very tenuous if you fell foul of the emperor and his praetorian guard. Our clan system of local governance ensured land for all the clan with the Taoiseach as the defender of that land against other clans - if you look at the annals of Irish history it is littered with clan wars over disputed land and cattle stealing with the odd bit of wife kidnapping here and there.

The arrival of the Normans and after them the British crown did very little to alter this state of affairs until the 16th/17th century at the earliest. British rule of Ireland for the vast majority of those "800 years of oppression" was tenuous and minimal to say the least. the crowns writ didn't run much further than 20-30 miles outside Dublin and the majority of the invaders assimilated with the native Irish and more of more concern to us - the majority of native Irish clan leaders took the titles and the creation of estates fixity of tenure and revenue and most importantly the concept of primogeniture (the first born inherited all - the rest can feck off and earn a living elsewhere) offered by the crown like ducks to water. The fact that primogeniture did not filter down the social strata below the newly enfeoffed lords was to shape the Irish nation right up to this day.

The minor clansmen gradually evolved into a tenant farmer with conditions that were the envy of all other who worked in the land in rest of Europe. This is very important. It meant in the main that the vast majority of Irish people were able to live off the land and the tenant farmer would divide his land between his male offspring and try and cadge another few acres thru marriage or by persuading the lord to give him more to farm with the promise of increased productivity.

This ensured generations of the same families farmed the same land for decades, centuries. Once the landlord had his cut, it was yours to do as you like. With the notable exception of the Ulster plantations in the 1600's, for the vast majority of the population up to the mid 19th century all that changed in the various civil wars and periodic uprisings was the landlord - depending on the crowns favour and who was the crown. Compared to the virtual enslavement and serfdom that was the lot of those who worked the land over the vast majority of Europe - The Irish Tenant Farmer had it good. Even the campaigns of the Bete Noire of Irish History - Oliver Cromwell (the first European republican head of state since Roman times, defender of the parliament and decapitator of the British King - eat your heart out Sinn Fein) had little effect on the agrarian Irish (unless you happened to be fighting for the British monarchy - Yeah , to paraphrase Martin Sheens character in Apocalypse Now " the contradictions and paradoxes in Irish history pile up so high you need wings stay above it!") .

The 1695 Penal laws, apart from putting the Catholic church on the run and persuading a few Papist landlords to convert to the C of I - after a few decades petered out to nothing - where they had been enforced in the first place. They had little or no effect on the peasantry who were living a subsistence existence and couldn't even dream about being a position to be effected by some of the economic sanctions. The only effect was they got a lyin on Sunday morning - the beloved hedge schools of popular myth were few and far between - the peasantry of Europe were illiterate until the coming of the Industrial society that required higher skillsets. Because of the nescessary nation and myth building required of the newly independent Irish state - not much of that made into the history textbooks that most Irish people of today were subjected to in our first and second level education system. If you're going to unify and then control a disparate group of individuals the easiest way is to do this is to find or create a common enemy - in Irelands case it was the British how they were totally and utterly responsible for all the woes that befell us. We're not alone in this - damn near nation state has got the hatred of another nation or people to thank for the fact that they are not in a perpetual state of civil war.

To come back to topic - by the mid 18th century the Irish tenant farmer was probably as close as it was possible to owing his own land in a time when the crown owned everything given to him by divine right by the Big Fella in the sky. Land passed down from generation to generation of tenant farmer in a continuous cycle which pretty much gave a De Facto , if not De Jure recognition of a sense of squatters right to the land- once the crown and his appointed agent - the landlord - was paid his due . Unless of course you lived in the American Colonies which were too far away for much of the crowns writ to run contained vast quantities of unclaimed land and unless of course you had the misfortune to be an native american or black.

If you're still with me - you will see that the Irish have had a good sense of propriatorship going back a long long way. This is why what happens in the tumultuous century and half from the 1750's is seared onto the national conciousness as ground zero for the Irish Nation. It had very little to do with the British in the end and there was very little that they could do to prevent the calamity that befell the country - even Geldof and Bono would have been hard pushed.
The famine years - 1761 , 1767 1792 , 1820 -1824 , 1828- 1830 ,1845-1849, 1872-1876 - were , to be perfectly blunt , an horrific example of when a stratified fossilised agrarian community with an demographic explosion fuelled by monoculture agriculture (the spud) runs head on into the Industrial age and the modern agricultural methods required to feed it. Simple as that. The issue of primogeniture that I brought up earlier just compounded the issue - farms were divided and subdivided ad infinitum to cope with growing numbers of mouths to feed and stay on the land if all possible - which dramatically reduced the land available to grow the cash crops required to pay the rent , which was being bidded up to extreme levels by tenants competing with each other desperate for more land to feed their growing families. the whole edifice was hanging by a thread and the potato blight was the puff of wind that knocked the house of cards over.

Yes it was a calamity a tragedy but not genocide - this was the era of Laisse faire economics and compassion politics was still a good fifty years away. Many were driven off the land ,but lets be brutually honest here , what future did they have on it? - and those that stayed and survived (and there were many - the famine was quite a regional phenomenon) got lucky when a combination of British Guilt over the famine, Fenian agitation and series of bombings in mainland Britain and the bankrupt state of a good share of the Landlord class gave William Gladstone the opportunity to fund the buyout of many estates by sitting tenant farmers - a unique matter which didnt happen anywhere else in the British Isles - I think a lot of the current property madness stems from there ,a long rooted jealousy at the luck of some families to be literally given their land (Im not talking 3-4 acre plots - we're talking 100+ acre farms here - which outraged my local MP of the time - Arthur Kavanagh of Carlow - in his biography he steamed at the injustice of the gov - blaming the famine on the landlords and taking away their land - He was from a long established Irish Grandee family who traced their roots back to the ancient kings of leinster - it wasn't just the "blowin "planters of Irish mythology whose lands were broken up.) while millions of others had to emigrate to the 4 corners of the world ,never having a chance to stake their claim in the land giveway at the end of 19th century.

It is interesting to contemplate what would have happened if Gladstone had approached the matter in a different way. Rather than going full throttle and deciding to buy the landlords out - what would have happened if the government had simply strengthened tenure, tenants rights and other matters more than the piecemeal way that they ended up doing? - Really, when you think about it - This was about as revolutionary as Ireland ever got - the tenant farmers that became landowners were very bit as conservative and possessive of their rights as their lords and masters who preceded them. The abysmal failure of the Irish State to industrialize and provide employment outside of the public service and small scale mechantile activity cemented the desire for ownership as a means of security in the Irish mind that exists to this day.

All the Easter rising and subsequent war of independence did was change the name of the door - nothing more radical than that despite the desires of many in the IRB.The yeomanry in the country wouldn't stand for revolution on the scale that engulfed most of Europe during this era - when property rights were quite literally thrown up in the air. They had their precious land and all they wanted was to get kick out the British government who gave it to them so they wouldn't have to finish paying off the mortgage (land annunities) . Its no co-incidence that most of our laws relating to property date back to Gladstone and Balfour's administration. Very little has been done since then to rebalance the equation - for the propertied classes - we have what we hold - and for the aspiring there is no way that they want rules changed now the tidal wave of cheap credit has them in reach of their goal.

William E Gladstone,Leader of Whigs, Prime minister of Britain - possibly the most revolutionary figure in Modern Irish Society –Theres one to ponder over your morning coffee and Danish eh!!

Afuera

iguana wrote:

Yes they most certainly do. Dublin is not Ireland. This house in Limerick rents for the same as the mortgage payments on a 90% mortgage on this house on the next street. Both are a 15 minute stroll from the city centre, so definitely an urban area. It's not a good buy-to-let investment unless you have a better than 10% deposit and are confident of a rise in property prices.

Hang on, you're not exactly playing fair here. There are plenty of places to rent around there for around the 700 mark. Also, you can't just take a 90% mortage and discount the 20 grand deposit that the buyer would have to come up with.
A 195,000 mortgage over 25 years at todays super low interest rates would cost the bones of 1,100 per month. Add in insurance, maintenance, furniture costs and that's going to bring it up another few hundred.
Comparing 700 p/m rent to 1,300 odd costs per month to the buyer is not far off twice the outgoings.

iguana wrote:

But if you're looking for a home, especially one to raise a family then there is nothing that could convince me that renting is the better choice.

And how about if the rent cost 10% of the comparable cost of buying or we had better protection for tenants? Where's the line where you you would actually sit back and think, renting might not be a bad choice all things considered? Or are you just totally biased in your opinion and happy to follow the herd into a spiral of debt?

Moonbeam

In reply to the above questions - I bought my house about 2 years ago.

The rent/mortgage amount does depends on the area in cheaper areas you prob won't get enough rent from the full house to take care of the monthly payments and the same at the other extreme but in the middle section the rent and mortgage repayments for a house are very similar.

Afuera

Moonbeam wrote:

In reply to the above questions - I bought my house about 2 years ago.

No surprise there.

Moonbeam wrote:

The rent/mortgage amount does depends on the area in cheaper areas you prob won't get enough rent from the full house to take care of the monthly payments and the same at the other extreme but in the middle section the rent and mortgage repayments for a house are very similar.

I agree that the ratio of rent/mortage depends on the area but you'll be very hard pushed to find anything in Ireland these days where the rent and mortage would anywhere near similar. Soma gave a good exampe earlier when he stated that he was paying 35% of the cost of the mortgage for his rent. This is not unusual.

Can you support your opinion with an example or maybe suggest a "middle section" area where the monthly rent and the mortage would be similar?

iguana

Afuera wrote:

Hang on, you're not exactly playing fair here. There are plenty of places to rent around there for around the 700 mark. Also, you can't just take a 90% mortage and discount the 20 grand deposit that the buyer would have to come up with.

Ok show me an example of two identical houses which are within 10 meters of each other. The house asking for €900pm is in a better area than the ones asking for €700. To that extent there are houses in those areas which cost less to buy. I chose those two examples because I know the area, because the houses are on two different streets on the same development built for private ownership in the 90's and because Soma specified somewhere urban. I was playing as fair as you can get. I could have used this house in Garryowen which is a 5 minute walk from the two houses in my example, but is a 60's ex-corporation house on a corporation estate. Despite the fact that most of those houses are now mostly privately owned the origins are still reflected in the price and so despite the fact that it is even closer to the city centre it is €35,000 cheaper.

And most people outside of Dublin pay the standard 10% deposit. Two professional people in their 20's have little to stop them saving that much especially as they are not paying stamp duty. Yes they may have to pay €20k at the start which renters do not, and they have to insure their house, but you keep discounting the fact that when 30 years have passed they will not have anymore mortgage to pay and will own the full value of the house, which they can sell or leave to their children. When you rent you get nothing.

Yes the insurance costs are higher than if you rent, but good insurance affords you much greater protection. If I or my husband falls ill our payments are made for us. If one of us dies or suffers long-term ill-ness the whole mortgage is paid off. If one of us gets an ill-ness such as cancer or has a heart attack, even making a full recovery the whole mortgage is paid off. There is no equivalent protection for renters, my life assurance of £75,000 wouldn't buy a studio. I don't want myself or my husband to get sick or die, but I'm secure knowing that if it happens we don't have to worry financially.

Insurance brings security, as does owning property. Renting leaves you vulnerable. Even the more secure forms of renting that are the norm in the rest of Europe doesn't give you that kind of security or freedom. You still have to move if your landlord want to move into your home in most cases. You are in a limbo if your home burns to the ground. You have very little protection if you or your spouse gets sick or dies. And you have no asset in your retirement or to leave your children.

Being aware that life can sometimes go really, really sh!ttily and taking steps to secure you and your family is not being a sheep. Being aware that you will not always be the person you are now and sacrificing a little of your present to ensure you are taken care of in old age or infirmaty is not being a sheep. Wandering blindly along the path of least resistance is.

seamus

Moonbeam wrote:

The rent/mortgage amount does depends on the area in cheaper areas you prob won't get enough rent from the full house to take care of the monthly payments and the same at the other extreme but in the middle section the rent and mortgage repayments for a house are very similar.

Depends too on what you mean by "middle section". I would consider a €350k two bed apartment to be "middle section". I would also consider a €450k three bed house to be "middle section".

Examples:
Ground floor two bed apartment in Knocklyon, €395k:
http://tinyurl.com/22t4ya
Mortgage (Roughly, assuming 92% mortgage): €1,800/month

2nd Floor two bed apartment in Knocklyon:
http://tinyurl.com/ynm38n
Monthly rent: €1,275

I've been in both sets of apartment blocks, and they're not small apartments. That's a massive difference in cost to the resident. How much would that €525/month extra be worth to someone?

It's actually at the cheaper end, and with new buys that buying and renting become closer;
http://tinyurl.com/3anqyh
http://tinyurl.com/yntcwf

Afuera

iguana wrote:

And most people outside of Dublin pay the standard 10% deposit. Two professional people in their 20's have little to stop them saving that much especially as they are not paying stamp duty. Yes they may have to pay €20k at the start which renters do not, and they have to insure their house, but you keep discounting the fact that when 30 years have passed they will not have anymore mortgage to pay and will own the full value of the house, which they can sell or leave to their children.

You can't just discount this 10% deposit though when comparing the cost of renting to buying.

Also, I'm not ignoring the fact that after 30 (or 40) years they will own the property outright if they chose to buy it. I'm simply pointing out that it's not always the best thing to buy ("whatever the cost"). I think that a lot of people ignore the option of renting out of hand without really thinking all their options through.

Take these examples of two properties on the same estate in North Dublin. One rents for 950 p/m (www.daft.ie/230669) and the other costs 335,000 to buy (www.daft.ie/197774). Who's getting the best deal here?

iguana wrote:

When you rent you get nothing.

I disagree with your opinion on this. At current prices the amount of money the renter will save is sizeable and can be channeled into many other investments of their chosing. The mortgagee is relying on either wage inflation to eat into their mortgage or capital appreciation to gain from their investment.

iguana wrote:

Insurance brings security, as does owning property. Renting leaves you vulnerable.

A homeowner with a large debt hanging over them could also be considered vulnerable. There are many factors outside their control that could put everything they have worked for at risk.

At the end of the day I think that your beliefs are consistent with the vast majority in Ireland, but this is not shared by all other cultures. EDO's post was very informative in showing how this view may have formulated over time but the OP clearly has difficulty seeing things in this way. Who's right and who's wrong? Or does it just come down to blind faith?

Kinetic^

Afuera, point taken on the disposable income that can be used for investments. However like the home owner, your investments like their home, has a chance of going belly up. I'm a home owner and I'd rather have a property when my mortgage finishes than have paid rent for the past 30 years and invested and maybe end up with less or nothing then with what I started with. That's just IMO though and I'm quite content to carry on with those beliefs.

Am I right or wrong? Well who knows, only time will tell....will I have any regrets if it goes belly up? Like all investments, there's a risk so no I won't have any regrets. I'll still be happy with owning the roof over my head, regardless of value.

iguana

Afuera wrote:

I disagree with your opinion on this. At current prices the amount of money the renter will save is sizeable and can be channeled into many other investments of their chosing. The mortgagee is relying on either wage inflation to eat into their mortgage or capital appreciation to gain from their investment.

Not in my example. The point of which was that Dublin is not Ireland, and what is happening in Dublin is irrelavant to the rest of the country.

What is someone going to do with £20k that will guarantee at least 10x that investment over 30 years. There are better investments than that of course, but there is also a big chance that over 30 years the house will be worth more than £195k. They wouldn't be saving anything monthly by renting. However while over 30 years their mortgage repayment will remain constant, becoming less of a burden in real terms as inflation rises, in 30 years the odds are the rent will just rise and rise. My grandmother was paying something like £2 a week in her mortgage which in the mid-80's when she finished paying it was a negligible amount of money. The rental on houses on that estate at the time was 20 times as much.

Afuera wrote:

A homeowner with a large debt hanging over them could also be considered vulnerable. There are many factors outside their control that could put everything they have worked for at risk.

Such as?