Buy or rent - what would you do?

Konata

Looking for a bit of advice on renting vs. buying. Myself and my partner are in mid 20s, both working professionals (public sector, I'm permanent and he will be in next few years so good job security and increments) and have been renting in Dublin for about 6 years. We've had a good deal on rent for last few years but would consider the accommodation a bit studenty and we would like something a bit bigger, more modern and less draughty/damp! Been looking for a while and after struggling to see the value in renting at the moment (crap places for sky high prices), some are recommending us to buy. We are not risk takers though and seriously fear getting stuck with an apartment/house a few years down the line when we want to move or start a family. There's also the increased deposit for non first time buyers to consider. On the plus side we would love to be able to have somewhere where we could see more value in our money than it just going straight into someone else's pocket! All of that said, we know very little about property and the current market and thus we would love some advice - if you were in our situation, would you consider buying or would you just keep renting?

Background info
Combined salary: ~60,000
Savings: ~45,000
Job locations: IFSC & Raheny area
Future prospects: Staying in Dublin for at least another 3-5 years and fairly likely a long time after that (cannot say for certain at this point though). We would envisage (all going well!) owning a larger house (3-4 bedroom) in next 5-7 years (hopefully less if I can work hard enough to get a promotion before then!).

Any advice appreciated!

OfflerCrocGod

You're not telling us your current rent, if it's a good deal I'd probably suggest sucking it up and to stay there and save as much as you can.

Shawn Michaels

Based on your salaries, you could borrow €210k (3.5 times €60k). Throw in your €45k and you've got €255k to spend. That doesn't get you a whole lot unless you're willing to buy an apartment, live in a dodgy area, or live quite a bit out.

Historically we were preconditioned to work our way up the property ladder. However, as many people learned (me included), a crash can leave you stuck in an unsuitable property.

I would therefore wait until your salaries and savings increase to a point where you can buy a place that you would happily stay in forever. That's not to say that you wouldn't trade up, but my advice is to avoid starter homes. You're young enough not to have to worry about running out of runway on the other side (e.g. 35/40).

Konata

OfflerCrocGod wrote: »

You're not telling us your current rent, if it's a good deal I'd probably suggest sucking it up and to stay there and save as much as you can.

850 and we live in Drumcondra. Obviously we're looking at quite a large jump in rent to move anywhere. Current place is quite small and old.

Shawn Michaels wrote: »

Based on your salaries, you could borrow €210k (3.5 times €60k). Throw in your €45k and you've got €255k to spend. That doesn't get you a whole lot unless you're willing to buy an apartment, live in a dodgy area, or live quite a bit out.

Historically we were preconditioned to work our way up the property ladder. However, as many people learned (me included), a crash can leave you stuck in an unsuitable property.

I would therefore wait until your salaries and savings increase to a point where you can buy a place that you would happily stay in forever. That's not to say that you wouldn't trade up, but my advice is to avoid starter homes. You're young enough not to have to worry about running out of runway on the other side (e.g. 35/40).

Thanks for the advice. Waiting is what we're leaning towards but I was starting to doubt this choice with the high rents. I would hope to get a promotion in the next few years to up my base salary to about 50,000 which would improve our borrowing capabilities with the increased savings by then too.

MarkAnthony

I was hoping you would consider buying Konata!

Kilbarrack has some great little places for very good prices for buying but bugger all to rent so I'd say buy with knobs on! You'll be able to walk to Raheny and get the DART into the IFSC in under 20 mins. I personally love the place. I'll grab you some links.

While I'd be very dubious about buying an apartment if you're buying a house within the M50 (I know technically D5 isn't) I wouldn't worry too much about being stuck. You shouldn't worry too much about the deposit either as you will have built up that equity in your home. The only real danger is you lose your bargaining position as someone without a chain (selling to buy) but 4ensic15 was making the point the other day that you get more traction with EAs as they can double their commision.

Here we go:

http://www.myhome.ie/residential/brochure/28-roseglen-road-raheny-dublin-5/3540386

I probably wouldn't go this side of the tracks myself but someone else might correct me on the area, just doesn't 'look' as nice that side.

http://www.myhome.ie/residential/brochure/86-swan-nest-avenue-kilbarrack-dublin-5/3551148

4ensic15

I lived in a kip in order to save the maximum towards a deposit. Short term comfort has to be sacrificed for long term gain.

I'd certainly be looking at buying, renting is a total waste especially the way prices have gone. You will almost definitely be able to save more if you buy than if you rent also so could be in a better position when it come to trading up. Also if prices continue to rise (which looks very likely) you will be better to be on the ladder.

On top of everything it's much nicer to have your own place that you can do with as you please rather than living in a rented place.

For what it's worth I'm in a far less secure scenario work wise and dont plan to stay living in the place I am now much longer than the next few years yet I'm currently looking at getting a mortgage and will be applying soon.

bigroad

There is a house for sale in the court high park drumcondra for 250k.Might be worth a shot op.
Maybe no back garden and it is only a 2 bed but it is a good starter in a good location.
You could always sell it on in two years and make yourselves a tidy sum to go on a bigger place.

Shawn Michaels

Yes, because property always goes up in value, doesn't it?

Konata

MarkAnthony wrote: »

I was hoping you would consider buying Konata!

Kilbarrack has some great little places for very good prices for buying but bugger all to rent so I'd say buy with knobs on! You'll be able to walk to Raheny and get the DART into the IFSC in under 20 mins. I personally love the place. I'll grab you some links.

While I'd be very dubious about buying an apartment if you're buying a house within the M50 (I know technically D5 isn't) I wouldn't worry too much about being stuck. You shouldn't worry too much about the deposit either as you will have built up that equity in your home. The only real danger is you lose your bargaining position as someone without a chain (selling to buy) but 4ensic15 was making the point the other day that you get more traction with EAs as they can double their commision.

Here we go:

http://www.myhome.ie/residential/brochure/28-roseglen-road-raheny-dublin-5/3540386

I probably wouldn't go this side of the tracks myself but someone else might correct me on the area, just doesn't 'look' as nice that side.

http://www.myhome.ie/residential/brochure/86-swan-nest-avenue-kilbarrack-dublin-5/3551148

Thanks for the links! Kilbarrack is one of the places that seems like it would be great to rent in but I haven't gotten an alert for a single property there yet! Thanks also for the argument for buying - it's good to hear from all perspectives. Interesting about the EAs/chain points, I hadn't really considered either. My main concern is just the possible inability to sell in a few years time and getting 'stuck'. I was leaving my school bubble and heading to college when the property crash and the recession hit so I feel like I've just grown up with the mindset of being super cautious (except now I'm afraid I'm being too cautious and it may be to my detriment!) as I didn't know/feel the effects of the good times, only the bad ones since ~2008!

4ensic15 wrote: »

I lived in a kip in order to save the maximum towards a deposit. Short term comfort has to be sacrificed for long term gain.

I totally agree. I've been living in kips mostly since I moved to Dublin in 2008 (including a year in a studio apartment in Tokyo!) and I will say I'm a bit sick of it at this point. However, I'm also conscious that I haven't even been working full time for a year yet so perhaps my penance isn't quite done yet! I do love saving and it is probably my biggest argument for maybe not moving at all.

bigroad wrote: »

There is a house for sale in the court high park drumcondra for 250k.Might be worth a shot op.
Maybe no back garden and it is only a 2 bed but it is a good starter in a good location.

Thank you, I'll check it out.

Shawn Michaels wrote: »

Yes, because property always goes up in value, doesn't it?

This is my big fear about buying - see beginning adult life as the property crash hit above! I don't really know the ins and outs of the property market though, and while I do know nothing is ever guaranteed, perhaps there IS some worth in purchasing now and it's less risky than I believe it to be. That's what I'm trying to find out anyway!

Hollister11

MarkAnthony wrote: »

I was hoping you would consider buying Konata!

Kilbarrack has some great little places for very good prices for buying but bugger all to rent so I'd say buy with knobs on! You'll be able to walk to Raheny and get the DART into the IFSC in under 20 mins. I personally love the place. I'll grab you some links.

While I'd be very dubious about buying an apartment if you're buying a house within the M50 (I know technically D5 isn't) I wouldn't worry too much about being stuck. You shouldn't worry too much about the deposit either as you will have built up that equity in your home. The only real danger is you lose your bargaining position as someone without a chain (selling to buy) but 4ensic15 was making the point the other day that you get more traction with EAs as they can double their commision.

Here we go:

http://www.myhome.ie/residential/brochure/28-roseglen-road-raheny-dublin-5/3540386

I probably wouldn't go this side of the tracks myself but someone else might correct me on the area, just doesn't 'look' as nice that side.

http://www.myhome.ie/residential/brochure/86-swan-nest-avenue-kilbarrack-dublin-5/3551148

You always mention kilbarrack. But IMO I'd stay as far a way as possible from it.

bigroad

Shawn Michaels wrote: »

Yes, because property always goes up in value, doesn't it?

Yes over the next few years it will.
Supply and demand .Its basic economics isn't it or is it.

outlooks

Konata wrote: »

Looking for a bit of advice on renting vs. buying. Myself and my partner are in mid 20s, both working professionals (public sector, I'm permanent and he will be in next few years so good job security and increments) and have been renting in Dublin for about 6 years. We've had a good deal on rent for last few years but would consider the accommodation a bit studenty and we would like something a bit bigger, more modern and less draughty/damp! Been looking for a while and after struggling to see the value in renting at the moment (crap places for sky high prices), some are recommending us to buy. We are not risk takers though and seriously fear getting stuck with an apartment/house a few years down the line when we want to move or start a family. There's also the increased deposit for non first time buyers to consider. On the plus side we would love to be able to have somewhere where we could see more value in our money than it just going straight into someone else's pocket! All of that said, we know very little about property and the current market and thus we would love some advice - if you were in our situation, would you consider buying or would you just keep renting?

Background info
Combined salary: ~60,000
Savings: ~45,000
Job locations: IFSC & Raheny area
Future prospects: Staying in Dublin for at least another 3-5 years and fairly likely a long time after that (cannot say for certain at this point though). We would envisage (all going well!) owning a larger house (3-4 bedroom) in next 5-7 years (hopefully less if I can work hard enough to get a promotion before then!).

Any advice appreciated!

Buying is still the best option. The loan will always be lower than the rent and you're buying something for you which most likely hold its value.

Being 255k your max consider Wicklow Town or Greystones. Really nice houses 3/4 bed being built in the area.

whiskeyman

Hollister11 wrote: »

You always mention kilbarrack. But IMO I'd stay as far a way as possible from it.

Why?
It's a big area.
It has some lovely parts as well as not so 'nice'.

PhoenixParker

I'd stay put and save until they raise the rent or a move becomes forced on you.

At that point I'd look to buy a decently sized two bed apartment in a solid area. 800sqft + so it's comfortable to live in, has storage and at least one parking spot and would be OK to live in with one child. Given you're in your mid 20s that should give you a decently long time horizon where you'll be comfortable living there no matter what other circumstances happen around you (like a market crash etc.)

Pay down the mortgage as much as you can, then when you want a forever home sell up and use the equity + savings to buy it. Whether the apartment goes up or down, you shouldn't be that much worse off then renting over a similar time period and you'll have stability and security of tenure.

The interest on the mortgage will be less then any rent you'd pay and the remainder of the payment goes towards equity. The extra E22k of equity needed for a 2nd time buyer mortgage will be paid off in 4 or so years (barring any price drops/increases).

MarkAnthony

Shawn Michaels wrote: »

Yes, because property always goes up in value, doesn't it?

It doesn't as we all know. We also all remember the dead cat bounce logic, the nay sayers etc. etc. the problem is there is never a 'best' time to get in. At the bottom of the market nothing is selling as people hold out, in an ascending market everyone is going nuts about 'the return of the boom' and in a descending market people are holding out 'as better value is just around the corner'. With the exceptions of avoiding an obvious bubble you're better off buying and being done with it. You might see a fluctuation a few percent either way - that's life.

Apartments are in a definite bubble as people struggle to stay within a particular postal code due to standard property sheep logic.

Inside the M50 is unlikely to be affected much by even a large uptick in supply as most of it is already developed.

Konata wrote: »

Thanks for the links! Kilbarrack is one of the places that seems like it would be great to rent in but I haven't gotten an alert for a single property there yet! Thanks also for the argument for buying - it's good to hear from all perspectives. Interesting about the EAs/chain points, I hadn't really considered either. My main concern is just the possible inability to sell in a few years time and getting 'stuck'. I was leaving my school bubble and heading to college when the property crash and the recession hit so I feel like I've just grown up with the mindset of being super cautious (except now I'm afraid I'm being too cautious and it may be to my detriment!) as I didn't know/feel the effects of the good times, only the bad ones since ~2008!

It's not really a rental area, most people are owner occupiers with some remaining local authority. There would be the occasional house but it's rare enough as people have the misconception - as below - so not may investors, more good news for property prices if you're buying.

Hollister11 wrote: »

You always mention kilbarrack. But IMO I'd stay as far a way as possible from it.

Yes as you've mentioned before I believe with absolutely nothing to back it up. I believe you were called on it then and again had nothing to back it up. Click around the map into Foxfield and Raheny, look at the prices for 3 and 4 bed homes. Those areas are walking distance as is the Howth road where you can't buy a shed for less than half a million.

You reckon the over spill of 'bad people' just can't be bothered to walk 5 minutes down the road to rob the lord of the Mannor? Is there the possibility that like areas of D3 areas of D5 are gentrifying as the squeeze on the traditional Northside suburbs happens and people figure out that being within 5 minutes walk of a DART station is probably worth more then being within a certain parish boundary.

That aside I actually live in the area and can attest to the nature of the people that live around here.

Areas in Dublin change, Dublin property snobbery does not, take advantage of that OP. Judge an area by what you find yourself, go with your gut and try and get recommendations from people you know. I was completely discounting D5 until I realised that I knew people that knew the area well who gave me the inside track as it were. I'm quicker into town now than I was from my Apartment across from Smithfield albeit DART v walking.

athtrasna

Ahem? Charter?

Mod

cbb1982

Buy Buy Buy

SarahMollie

Hi OP,

I think you've two good choices, but moving to rent elsewhere isnt one of them.

I'm not sure what your current place is like, but even a pretty average 1 beds regularly go for €1,100 in the areas you've discribed, if not more.

I think you should either buy or stay put and save while hopefully moving up the ladder.

Personally I don't see prices falling in Dublin in any real way. There is just too much pent up demand. Also, there are some brownfield sites in the city, but the majority of large scale development will be outside the M50, places like Swords, Cherrywood etc.

So I wouldn't see an issue in buying a "starter" home once its in a reasonably central location where massive new developments arent really possible.

I bought myself last year and its definitely not a forever home but equally its not somewhere I'll grow out of any time soon (102sqm duplex with large terrace)

Once I've paid down the mortgage for maybe 5 years, I'll be on the look out for something more permanent.

o1s1n

Shawn Michaels wrote: »

Yes, because property always goes up in value, doesn't it?

Even if it does go up in value, after solicitor fees/EA fees you'd have to be selling for quite a bit more to make a substantial profit.

I bought at 270k, sold a year and a half later at 282k and after all fees considered, made a loss.

Konata

Thank you so much to everyone who took the time to reply so far - I really appreciate all the advice and experiences! We're going to seriously consider buying. I always saw it as such a far off thing that I've never really thought about it fully but when I'm seeing that we could be paying less or the same in a mortgage every month and actual OWN the place, it certainly becomes something we need to think about! I do still have the 'fear' of negative equity but I've actually been looking at a lot of properties over the last day and I've been really pleasantly surprised to discover we actually could afford some 3 bedroom places right now in areas like Clongriffin or Kilbarrack (which were places we were looking to rent in anyway). I don't feel quite as wary about getting 'stuck' with a 3 bed because even if we did (absolute worst case) there's still room for kids etc. in that.

So yea, a lot of food for thought in this thread and we're going to continue to explore the market (both renting and buying), stay put for the moment to really consider our options (and keep saving!) and maybe even take a trip to a broker to see what sort of mortgage we might get approved for (I know we have the min. 3.5 salary multiple and deposit but I'd be interested to see if we might be eligible for an exemption on the multiple since we have secure jobs with increments, no loans, history of saving etc. etc. etc.).

Thank you all anyway!