Obsession - englightenment please!

talkingclock

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

talkingclock

Nereid, thank you for your helpful posting and your valued advise. Would you please explain "integration" related to "why are you obsessed with buying properties" a bit further?

I'd love to talk about bollywood blockbusters and cars. But would the Accomodation/Properties board the right place for it? How is it related to my question?

Thank you in advance!
TC

CiaranC

Traditionally, a huge part of it is because tenants have so few rights in this country compared to somewhere like Germany that people feel the need to buy property to feel comfortable where they live, that its 'home'.

Calina

Nereid, that is a hugely unhelpful response to be absolutely blunt. The guy has a valid criticism about life in Ireland and your response is to tell him to shut up or put up. It's typical of this country actually. I'm Irish and I actually agree with him and just because he questions our view on property does not mean he is not integrating. I lived in Germany in the 1990s and frankly you would be ashamed by how many Irish people living in Germany at the time didn't even bother to learn to speak German - some way of integrating, I would say. I would venture to say that any non-national who can come on a message board like this and write fluent English is making a better stab of integration than many Irish did when they were on the emigration trail.

OP, there are several reasons. One of the most popular reasons given is historical. In the past - in the long time past - there was a saga involving landrights, land ownership, based on absentee landlords in the UK holding land in Ireland, problems with eviction and a major lack of security of tenure. Because of this, culturally, the Irish attach a lot of importance to owning their own property. That is one reason although I suspect it is no longer the most important.

The second reason is that currently, tenancy legislation is far less protective of the tenant in Ireland than equivalent legislation in either Germany, France or Belgium (I have experience of this countries myself). Security of tenure is limited to 56 days in a base case scenario if the landlord wants to sell or occupy the property him/herself. As such, most people in Ireland find it too precarious for planning. Additionally, we now have a lot of amateur landlords who do not know their obligations under current (less than onerous) legislation and behave accordingly. I am speaking from the experience of getting 2 weeks notice from a landlord when according to the law I was entitled to 8 weeks, for example.

Third reason is the horrific capital appreciation we've witnessed here for the past ten years or so. If you bear in mind that apartments in the estate I live in went up in market value by 100,000E in the last 18 months, you might understand a prevailing fear that if people don't buy as soon as they can afford to, they may be (and have been) priced out of the market. This does not lead to very rational behaviour given the second reason I cited above.

Fourth is this idea that rent is somehow a waste of money. That's kinda naive I think. It's tied in with "and I don't want to pay someone else's mortgage either". Effectively they are short term points of view in some ways, long term in other ways. The problem - as I see it - is as an excuse that only works if you are living in a property that a) you love and b) suits you for the long term. Unfortunately most small apartments in Ireland rarely fall into that category and many people at the limit of affordability, that's what they are buying.

Yes it's an obsession and we don't all have it to the same degree. However, my view is that obsessions can destroy you and this one is not going to be any different.

bringitdown

/edit: Looks like Calina got the point across whilst I was a-typing.

Good crap nereid that was totally uncalled for.

Lets for the sake of argument say the OP was not German and instead a "lovely" oirish person, their question is just as valid and would not attract that kind of response.

OP I guess there is no straight answer, some would say its a throw back to when we were under British rule and we land-lorded over so to speak, some would say we have too much money and no sense, some would say its is just nice to have a house that you can always fall back on.

The idea of paying a landlord for the rest of your life, given that you have little or no long term leasing here and that they have the power (thanks to archaic laws dating back to ... !) it just doesn't appeal to most people.

That said I am happy as larry to rent right now, it is more flexible, incurs no debt on my behalf etc etc. I guess I'll WANT a house when I really need one.

Sponge Bob

talkingclock wrote:

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

It goes back to the 19th century The Famine and the Evictions After the Famine and the Land Wars

Basically if you owned your own land then you might not starve to death like 1m Irish did between 1845 and 1849. That sort of explains the basic obsession with owning not renting , in ireland 80%+ own where in Germany 80%+ Rent.

In very recent years our banks have done some very stupid lending which has gone on overpriced property in MittelEuropa and Bulgaria and Cape Verde and anywhere else that has a property bubble nowadays.

These banks stupidly believe their money is totally secured on 'valuable' Irish property and also that the whole of the new EU want to be 'property owners' like the Irish .

Moonbeam

There are plenty of reason.

Rent is dead money,you can't do up a rented house.
There is also pride in having your own house and for the last few years they have also been a good investment.

If I wanna go travel the world I can sell ym house and travel on the profits that I have made:)

Obelisk29

talkingclock wrote:

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

TC

You could start by reading J B Keane's The Field (or even renting the video) - something akin to the German concept of heimet.

It may have started with <yawn>800 years of being under the British jackboot</yawn> but latterly it's more a case of crazy capital appreciation and the opportunity to borrow money from the Germans to buy German cars

Zambia

Please ignore Jade goodys previous post. I saw no complaint against Irish society its a valid piont.

Basically we are all told from a very young age by our parents that we have to get on the property ladder. We are also told that rent is dead money you are only paying a landlord.

There was also large periods of time , when tenents rights where a huge issue under british rule. Some would say we still lack in this respect to this day.
Absentee landlords created much hardship. See here for an example

Boycott

Hence we are a little obessed with land especially since the last ten years has seen investment property give such good returns. Not to mention everyone likes to see there property rise in value. Whereas if you are renting you simply worry will your rent go up.

All in all these factors IMO opinion have lead to the current interest in property. Not to mention that ireland is now ranked as one of the richest countries in the world by rational that we own the most of our own property, Plus we own more property in europe per capita head than any other country.

Right or wrong mate thats how it is over here. Im sure i have left something out but I am equally sure someone will enlighten us

I suggest you have your friend look at the Bubble Bursting thread (20 pages long) where so far no-one has come up with a good case for house prices not falling this year. He is a braver man than me if he is going to buy a flat this year.

Calina

Moonbeam wrote:

There are plenty of reason.

Rent is dead money,you can't do up a rented house.
There is also pride in having your own house and for the last few years they have also been a good investment.

If I wanna go travel the world I can sell ym house and travel on the profits that I have made:)

Rent is not dead money, it is payment for a service. Unfortunately Irish people tend not to recognise the value in that service for different reasons.

Because of the nature of the rental market in Ireland, you can't do up a house. You could if there was more security of tenure and if, as in Germany, the only requirement was that you redid it as you got it when handing it back. As most property in Ireland is furnished, this is difficult. Someone mentioned that this was linked also to landlords trying to limit security of tenure - in the past - apparently - you had more rights as a tenant if you furnished the property yourself rather than using the landlord's furniture.

Pride is not a valuable asset because it can be misplaced. You can have pride in your own place certainly, but most pride - latterly - is linked to its monetary value, not its utility value. This has led to the ridiculous commuting society we have right now. We attach more importance to owning the house rather than the practicalities linked with the location of that house.

If you want to go and travel the world, you can sell your house, yes, but there are transactional costs - which mean rebuying later will cost disproportionately more, and if you decide to rent it out, you're one of those am landlords contributing to an unstable rental stock. You also - at this stage - cannot rely on profits on housing as market values are stagnant and, in many cases - falling.

Idleater

Ok.

I was quite harsh in my post.

However, at the risk of pointing out the obvious, there is a huge number of threads with a huge number of posts.

namely Housing Bubble bursting in which the question that the OP is asking is answered.

Similarly people have different opinions

callina wrote:

Rent is not dead money, it is payment for a service. Unfortunately Irish people tend not to recognise the value in that service for different reasons.

moonbeam wrote:

Rent is dead money,you can't do up a rented house.

The OP is not going to get an answer on an internet forum, in the same way that they are not going to get an answer from the person in work.

L.

Calina

nereid wrote:

Ok.

I was quite harsh in my post.

However, at the risk of pointing out the obvious, there is a huge number of threads with a huge number of posts.

namely Housing Bubble bursting in which the question that the OP is asking is answered.

Similarly people have different opinions




The OP is not going to get an answer on an internet forum, in the same way that they are not going to get an answer from the person in work.

L.

The OP has already gotten quite a number of valid answers on this forum at least. Directing him towards HouseBubbleBursting is not a helpful response as it is becoming a garagantuan thread dealing with why prices should be coming down, and not why the obsession exists in the first place.

Your response was not just harsh, it was rude and unhelpful. You could have just ignored the post but you didn't and your latest doesn't justify your earlier post, end of story.

talkingclock

Dear all,

thanks a lot for the input and the positive encouragement. Ye all mention the famine and the landwar as a reason. in a bigger historical context, of course. But you're not expecting a new land war or famine, don't you?

It helps me now a bit more to understand...

Re the low tenant rights: just read the other thread "a tenant demolished a wall by hammering nails in it". I now totally understand...

But back to my observations. Those who lived in Germany will maybe understand if I am astonished to see so many people buying houses and living in estates where all houses looks as the same, with no infrastructure and where internal walls are build of Sheetrock and without infrastructure in the estate for a just horrendous price that is not mirroring the actual value of the dwelling (ever seen a house without cracks in the wall?).

You might be wondering why I'm so observant. After four years now on Emerald Island I made up my mind and might share your obsession But i definately will wait a bit longer

EDIT: I read already the Housing Bubble Bursting thread with high interest for a certain reason - see my last sentence.:)

CiaranC

Nereid, why are you posting in this thread? Youve contributed nothing other than flaming, trolling, directing the poster to threads with hundreds of replies and suggesting that internet forums are pointless. Stop posting.

Calina

talkingclock wrote:

thanks a lot for the input and the positive encouragement. Ye all mention the famine and the landwar as a reason. in a bigger historical context, of course. But you're not expecting a new land war or famine, don't you?

It helps me now a bit more to understand...

Re the low tenant rights: just read the other thread "a tenant demolished a wall by hammering nails in it". I now totally understand...

But back to my observations. Those who lived in Germany will maybe understand if I am astonished to see so many people buying houses and living in estates where all houses looks as the same, with no infrastructure and where internal walls are build of Sheetrock and without infrastructure in the estate for a just horrendous price that is not mirroring the actual value of the dwelling (ever seen a house without cracks in the wall?).

Those of us who lived anywhere other than Ireland or the UK....

There is some scope to assume that there will be wholesale war when the chickens come home to roost, the housing market crash, negative equity stalks the land and people demand to know why other people told them it couldn't happen, that you couldn't lose money on property.

As for the housing stock: political will in this country is against one off housing (or popular will) on environmental grounds, but planning is done piecemeal. Me, I'd like to see gated/walled estates banned and apartment blocks built as streets and avenues rather than in nameless estates which are difficult to serve by public transport. As for the build quality, ahem, don't get me started. Even we complain about it...but not enough, and because of the massive excess of demand over supply lately, builders have been able to pretty much do what they like.

Don't much like it myself, to be honest.

Zambia

talkingclock wrote:

Re the low tenant rights: just read the other thread "a tenant demolished a wall by hammering nails in it". I now totally understand...

That was a simple case where the tenant had damaged the property , no european country would have allowed it , Surely?

talkingclock wrote:

But back to my observations. Those who lived in Germany will maybe understand if I am astonished to see so many people buying houses and living in estates where all houses looks as the same, with no infrastructure and where internal walls are build of Sheetrock and without infrastructure in the estate for a just horrendous price that is not mirroring the actual value of the dwelling (ever seen a house without cracks in the wall?).

Ok can you tell us what the property market is like in Germany? Remeber something is worth what people are willing to pay for it. It would be like saying the mona lisa is just some paint and canvas.

Moonbeam

"Pride is not a valuable asset because it can be misplaced. You can have pride in your own place certainly, but most pride - latterly - is linked to its monetary value, not its utility value."

There is more pride in actually owning a house rather then the monetary value of the house,starting out anyway.

"Because of the nature of the rental market in Ireland, you can't do up a house. You could if there was more security of tenure and if, as in Germany, the only requirement was that you redid it as you got it when handing it back."

I wouldn't see much point in doing it up in the first place then.

I rented for about 6 years,if I leave the country for a while I have no problems renting my house out,I have nothing against rental generally but I do feel it is much nicer to go home to your own house,paint it what colours you want,put down what ever flooring you want etc

hmmm

I think it's because Irish people have only recently come into wealth as experienced by other Western Europeans. Until recently, "wealth" always seemed to be measured by property. Irish people are quite naive investors as we don't have the hundreds of years experience managing wealth Germans would have, and tend to be sucked in by investment scams and impossible promises of wealth. You see it reflected also in previously very poor countries like Spain and Portugal.

A 21 year old desperate to buy property is not a surprise, their whole experience (and the advice handed down from their parents) is to buy property. Sure you'd make more money doing something else or by renting nowadays, but that will take 20 years to sink in. It's inexperience, and it is being preyed upon by the unscrupulous (watch Irish "investors" pour millions into countries you've never heard of).

Calina

Moonbeam wrote:

"Pride is not a valuable asset because it can be misplaced. You can have pride in your own place certainly, but most pride - latterly - is linked to its monetary value, not its utility value."

There is more pride in actually owning a house rather then the monetary value of the house,starting out anyway.

"Because of the nature of the rental market in Ireland, you can't do up a house. You could if there was more security of tenure and if, as in Germany, the only requirement was that you redid it as you got it when handing it back."

I wouldn't see much point in doing it up in the first place then.

I rented for about 6 years,if I leave the country for a while I have no problems renting my house out,I have nothing against rental generally but I do feel it is much nicer to go home to your own house,paint it what colours you want,put down what ever flooring you want etc

On the other hand, I have major problems with people like you doing that because it has an impact on the rental market. The current house I live in is rented out by someone who has done just that and because there is always a risk that the owner will come back from her year out and reclaim her house I have absolutely zero security of tenure regardless of the protection afforded me in law. Occupation by landlord or family thereof is one of the reasons a Part VI tenancy can be terminated. As a result, this feeds into the issues in the rental stock and directly causes some of this obsession with property which imo is far from healthy if only because obsession in anything is usually unhealthy.

As for your point about redecorating - if there was decent long term security in this country and if it were possible to rent places unfurnished (there's a very limited market on that front here) I wouldn't actually have a problem with it. In Germany my experience was that things could be negotiated with landlords, for example. Here you can't.

In this country - at this moment - most people are expending energy on how much the value of their property has risen since they bought it. Pride in actual ownership might come back when houses cease to be seen as a get rich quick seen and then people might stop posting idiotic questions like "I've bought a house in Balbriggan, anyone know how to get to Clondalkin fast as possible". People are valuing ownership over practicality and that is a recipe for disaster.

Sponge Bob

talkingclock wrote:

Dear all,

thanks a lot for the input and the positive encouragement. Ye all mention the famine and the landwar as a reason. in a bigger historical context, of course. But you're not expecting a new land war or famine, don't you?

We do not expect a new famine but in the west of Ireland we can still see the famine fields every single day . The population in the west was decimated. Look at the differences between 1841 and 1851 here and here

We had one or two similar famines in the 1700s . In each of the great famines at least 10% of the population was wiped out. In 1741 it was possibly as high as 12% in one year, worse than the great famine in 1845-49.

In each of the great famines the popuation of the west of Ireland reduced by 25% in a short space of time. Many died while many left for Liverpool and Boston and Dublin .

These were very traumatic events , worsened by the fact that the victims were forced to pay rent to the landlords who had stolen their land off them in the 17th century. To my mind the thing that finally killed off the famine was Ireland joining the EU in 1972 and discovering Butter Mountains and Wine Lakes. The great famine had a lasting effect until about 1980 to my mind and this effect impacted on everyone born before about 1975 who would be somehow conscious of it, even if only because their grandad would refuse to eat dinner if there were no potatoes. The older you are the more profound the effect. Mussels in the west of Ireland, they were "Famine Food" for many and lots refused to eat them.

As 80%+ of the population have owned in Ireland since about 1903 after the Wyndham Act the state did have equally high priorites to protect the 20%- who rent because most own instead. In Germany the 80%+ who rent have priority when laws are made.

The laws are normally made in order to protect the majority interest , whatever the country .

talkingclock

Zambia232 wrote:

That was a simple case where the tenant had damaged the property , no european country would have allowed it , Surely?

No landlord in Germany would make a fuss about nails in the wall as this is considered as normal living... But that's not to be discussed here in that particular thread here

Zambia232 wrote:

Ok can you tell us what the property market is like in Germany? Remeber something is worth what people are willing to pay for it. It would be like saying the mona lisa is just some paint and canvas.

My hometown Erfurt (www.erfurt.de) has approx 200,000 citizens, is the capital of county Thueringen (and therefore a lot of civil servants with reasonable income) and has an unemployment rate of approx 16%. If we buy houses we first check for the square meters and then for the bedrooms. We value the house mainly for space and not for the amount of rooms. Just as a little background.

Now, house prices there reach from 180sqm living space, 6 rooms, 585sqm land for 320,000 EUR just outside the city centre but not suburban to 130sqm/145sqm, 4 rooms for 87,000 EUR in a sub urban enviroment (but with tram and bus connection). A prime location in the historical city centre would be 127sqm, 4 rooms for 235,000 EUR.

Just have a look here for a list: http://tinyurl.com/2ogvat

After all still cheaper then a flat in Ennis I guess...

Calina

talkingclock wrote:

No landlord in Germany would make a fuss about nails in the wall as this is considered as normal living...

but then, no plasterboard walls either, I guess....

and agreed about the square metrage here - the only interest here seems to be is it or is it not over 125 sq metres (stamp duty band....)

talkingclock

Calina wrote:

but then, no plasterboard walls either, I guess....

See, would you have a house built properly with a proper wall - it wouldn't fall apart

Sponge Bob

talkingclock wrote:

See, would you have a house built properly with a proper wall - it wouldn't fall apart

I had a job once in Germany installing bathrooms made completely out of a lump of plastic in through where the window was supposed to go

talkingclock

Sponge Bob wrote:

I had a job once in Germany installing bathrooms made completely out of a lump of plastic in through where the window was supposed to go

Wha?! Really? :eek: When and where? Social housing built by the government?

Zambia

talkingclock wrote:

See, would you have a house built properly with a proper wall - it wouldn't fall apart

So you admit the wall fell apart thats damage ergo - they damaged the property

Anyway thanks for that rundown.

So i gather that if myself and all my Irish investor buddies brought loads of these 87,000 euro Houses how soon could we expect to see a rise in them ?

Lads just as a matter of interest here is the current selling price of a full spec X5. 131,000

http://cbg.ie/NewCars/BMW/X5/SUV/4.8iS_Auto_Exclusive_Edition.aspx

The mind boggles

Idleater

CiaranC wrote:

Stop posting.

Done and Done...

D'oh!

L.

Sponge Bob

talkingclock wrote:

Wha?! Really? :eek: When and where? Social housing built by the government?

Munich in teh 1980s , student housing actually. I was amazed because I thought the Germans could tile .

talkingclock

That's really surprising. Was it like a fitted plastic box?

@zambia: don't do it! You and your fellas already have ruined the market for the locals in spain and south of france. The same as the germans did on Majorca...

gazzer

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.

Calina

Sponge Bob wrote:

Munich in teh 1980s , student housing actually. I was amazed because I thought the Germans could tile .

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

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.