Is rent dead money?

steo123

paying 500 per month for past few years feel like im wasting it in getting no younger still no place my own

blah

It depends on how you look at it. If you're renting you have the freedom to move easily. It's more likely that you can live where you want, in an area where you wouldn't have been able to afford if you bought.

Mr. Incognito

You are buying a roof over your head.

I just cannot understand our fascination with tying a millstone of a mortgage around your neck at such a young age. Wait till you have a family and you need a anchor.

janmc

Plus 500/month isn't that much to be honest... well depending on your location.

starky

janmc wrote: »

Plus 500/month isn't that much to be honest... well depending on your location.

Average hose price is what 350 400? In Dublin? Work out how much that would cost you over the space of 40 years! Way more then 500 in rent.

patrickolee

As previous posters said, 500 is not bad. Wouldn't consider it dead money. if you were paying 1200 a month, you might consider some of it 'dead'!

But as you indicated "getting no younger", this is true... if you're still in your 20s then dont worry about it... if you're in your 30s then it is starting to affect how long the term of any mortgage you get in the future can be. As a result its affecting how much you can afford to pay, so yes... but I suspect you're in your 20s, so don't bother your head. Enjoy yourself... and dont forget the sunscreen...

Homer J Simpson

SetantaL wrote: »

Wait till you have a family and you need a anchor.

Probably the best piece of advice I have read on the Internet so far..... and that's a lot of reading.

Running Bing

starky wrote: »

Average hose price is what 350 400? In Dublin? Work out how much that would cost you over the space of 40 years! Way more then 500 in rent.

How much would the apr be on a 400k mortgage for 40 years?

Raskolnikov

patrickolee wrote: »

As previous posters said, 500 is not bad. Wouldn't consider it dead money. if you were paying 1200 a month, you might consider some of it 'dead'!

I agree with that.

€500 a month won't even cover the interest payment of a mortgage.

If you're paying €1,200 a month for a standard apartment though, some of the portion of that would be dead money, as it wasn't going on interest.

DublinWriter

SetantaL wrote: »

Wait till you have a family and you need a anchor.

Wait till you're 60 and have feck all equity to show for 30 years of being a good tenant except a file full of rent receipts.

Rent = dead money. Those that will tell you otherwise are 20-somethings trying desperately to justify their hopeless position to themselves.

Over the average life of a mortgage (25/30 years) you won't lose out on your original investment.

chump

DublinWriter wrote: »

Wait till you're 60 and have feck all equity to show for 30 years of being a good tenant except a file full of rent receipts.

Rent = dead money. Those that will tell you otherwise are 20-somethings trying desperately to justify their hopeless position to themselves.

Over the average life of a mortgage (25/30 years) you won't lose out on your original investment.

You're dead wrong DublinWriter and if the simple logic that has been spouted out here week after week can't display to you that you are wrong - God bless.

OP rent is not dead money. It can be dead money. It can be bloody smart money too.

dudara

DublinWriter wrote: »

Rent = dead money. Those that will tell you otherwise are 20-somethings trying desperately to justify their hopeless position to themselves.

There's the problem in a nutshell. People feel that they HAVE to buy, otherwise they're failures.

It's up to you. Are you happy with your life at the moment? To be brutally honest here, make up your own mind as to whether or not buying a home is worth it.

punchestown

DublinWriter wrote: »

Wait till you're 60 and have feck all equity to show for 30 years of being a good tenant except a file full of rent receipts.

and a lovely tidy sum sitting in the bank. Ideally you would have bought about this time last year, lost around €50,000 in equity with the promise of further losses. But sure not to worry about that, you would have 40 years to pay that mortgage off!

Dead money in rent terms is paying €1500 per month as a couple when you could be renting with friends or strangers paying a couple of hundred a month and saving a nice four figured sum each month that a few years down the line will be paying off a nice chunk of a reduced mortgage meaning that in later years, you will not still be required to work past retirement age.

DublinWriter

chump wrote: »

You're dead wrong DublinWriter and if the simple logic that has been spouted out here week after week can't display to you that you are wrong - God bless.

OP rent is not dead money. It can be dead money. It can be bloody smart money too.

Yeah, sure, spend 30 years paying someone else's mortage off then tell me I'm stupid.

Meanwhile back to your Frappachinos, Panninis and group motivational meetings....

A Random Walk

This is a futile discussion, the math is simple but some people prefer to rely on equally simple mantras they can repeat while holding their hands over their ears. Frankly if they want to lose money who are we to try and stop them

regi

Where did he say 30 years? The implication is that buying at the moment, in a dropping market as opposed to waiting for a few years for the market to turnaround means you lose money in both capital depreciation AND interest whilst saving cash in excess of your rent and earning interest on it.

While your argument rings true in a rising market, your argument is 100% wrong in a falling market.

scruff321

dublinwriter i think what is been said here is that yes it is a waste of money paying rent over the long term plan is a bad commitment but when your young its ok because as has been said you arent exactly tied down, however imo i beleive if you are paying top dollar for renting a swanky appartment as opposed to owning your own property and you are in your late 20's think that is a waste of money

Victor

One needs to factor in that properties are currently overpriced and that if you spend €400,000 on a property that €100,000 might be dead money in the very short term that you will pay interest on for the duration.

chump

DublinWriter wrote: »

I'm stupid.

heh heh

the youf of today eh

*sip* *sip*

Pa ElGrande

When you pay rent you are making use of a service (shelter provided by another). In the same way you pay for use of electricity, internet access, mobile phone, petrol etc.

The ultimate example of dead money is stamp duty, you receive no benefit or service by paying this and likely have to borrow in the case of housing to pay this tax. It can also be argued that spending money on the lotto is 'dead money' indeed I would classify gambling as dead money also, since the bookie always wins.

For argument's sake you pay €500 in rent today, if you were to buy the place with a mortgage how much would it cost you - let's say €1200 a month for argument sake. That's €700 extra you have to find to rent the banks money for the same service you enjoy today with very limited risk.

House prices are still much too high, far beyond any historically known relationship to rents or salaries. Typical yearly rents are 3% of purchase price (varies with location). Mortgage rates are roughly 5.5%, so it costs 1.8 times as much to borrow money to buy a house than it does to rent the same thing. Worse, total owner costs including tax, service charges, maintenance, and insurance are higher, which would easily make three times the cost of renting. An average salary cannot cover a mortgage in most cases. Anyone who buys now will suffer losses immediately, and for the next several years at least, as prices keep falling.

OK, you say when I retire, I'll own the property outright and I'll be able to sell it to fund my retirement and move to Spain (whatever your goal is). But lets look at this another way, what do you do with that €700 today, are you investing it? What yield are you getting on it? What about compound interest?

Calina

It never fails to amaze me how simplistically some people look at things.

Rent is not dead money. It is payment for a service, pure and simple. It is appropriate for some people at certain points in their life. It is problematic in Ireland because tenancy regulation is relatively weak here.

No one I know who rents advocates only ever renting, yet most people I know who buy assume that buying is the only sensible thing to do. The truth is most people with sense will rent when it suits them and buy when it suits them. That means that a lot of people who feel that it is more beneficial to them to rent now will almost certainly buy at some point in the future, and that point may or may not be 30 years down the line.

Anyone who says rent is dead money clearly has no understanding of the nuances of what people need at different points in their lives. I'm 35 years old and what I need is a short commute to work. I rent because to buy I would have to have a 90 minute commute to work and I don't see how that would add to my quality of life. I attach a great deal more importance to quality of life than I do to owning a house or, in these enlightened times, a one bedroomed apartment costing the same amount as a house in the south of France.

What constitutes dead money in my opinion is the cover charge to a night club. At least with rent you get a roof over your head.

antoinolachtnai

Remember, that rents may go up too. If rents continue to rise in line with inflation, buying a house will definitely have been the right thing to do. Now we are into futurology. I think that in many areas, rents will probably stay steady. In some areas though, they will continue to rise slowly.

Another aspect is tenure. If you are renting, you basically have very limited rights to stay in the property, even if you like it and are happy there. Owning a house gives you some rights.

Colonel Sanders

DublinWriter wrote: »

Rent = dead money. Those that will tell you otherwise are 20-somethings trying desperately to justify their hopeless position to themselves.

I am a 20 something. I could get a mortgage tomorrow and buy for the sake of it in an area I don't want to live in, miles and miles from my workplace and in a market that still has at least some way to drop still IMO. I don't really want the hassle of owning a house yet (I might decide to f*ck off abroad for a year working in the sun) Instead I live in shared house paying f*ck all in rent (fair enough its not a palace but its fine, I like living here) I save a substantial amount every month into a high interest regular saver account. I am in a good job where wage inflation definately has the prospect of outstripping house price inflation over the short to medium term. Please tell me how this is a hopeless situation?

DublinWriter wrote: »

Yeah, sure, spend 30 years paying someone else's mortage off then tell me I'm stupid.

I don't plan to spend 30 years renting, I plan to enjoy myself for another while yet without the hassle of owning an overpriced property and the joys of negative equity (my opinion on the level of property prices obviously, feel free to disagree) and the freedom to up and leave at any time without leaving a property to manage.

DublinWriter wrote: »

Meanwhile back to your Frappachinos, Panninis and group motivational meetings....

I don't like coffee

Colonel Sanders

Calina wrote: »

No one I know who rents advocates only ever renting, yet most people I know who buy assume that buying is the only sensible thing to do. The truth is most people with sense will rent when it suits them and buy when it suits them. That means that a lot of people who feel that it is more beneficial to them to rent now will almost certainly buy at some point in the future, and that point may or may not be 30 years down the line.

Very sensibly put

is_that_so

"Dead money" IMO is just a twee mantra from the Irish psyche of a certain ilk -certainly my parents' generation had that whole "land is your only man" attitude. Mostly IMO it's just a manifestation of our obsession with property ownership. Purchasing new cars may also be seen as daft as well, seeing as you lose so much on it seconds after driving off the forecourt.

I rented for a good number of years abroad and probably would have continued to do so as rental was recognised as a perfectly normal way of life. As pointed out there's also a serious absence of regulation and legislation of the rental market here.

leeroybrown

As some posters have pointed out above it entirely depends on someone situation. I own a house (with a moderate mortgage) but I don't live in it. I probably won't ever even consider living where the house is. I live somewhere a suitable for my workplace and social life.

If I did live in Dublin I don't think I could bring myself to join the 60+ minute commute just to have a vastly overpriced three or four bed semi somewhere where mortgages were within reach. Forget dead money that would be a dead life.

someuser90

The property bubble is bursting

That ~€10,000 "dead" money spend on rent in 2007, prevented me losing > €30,000 in equity if I had of bought. I only began renting last year

Let the GAZUNDERING begin in 2009

johnnyskeleton

Rent is not dead money, so much as the money you'll have to pay back to the bank over the next 5 years if you take out a 100% mortgage you can't afford, are brought to court and the house is sold for several grand less than you bought it for.

You could find youself owing 5k legal costs, 10k arrears of interest and 20K+ for the pleasure of buying a house you can't afford, or even buying a house and suddenly finding yourself ill, unemployed, separated etc.

To be honest, I wouldn't buy a property unless I could easily afford it, easily get through a few lean months, and also have an exit strategy if it goes tits up. If you don't have enough for a deposit and fat, regular paycheck, then renting is far from dead money, it gets rid of all risk, and if house prices go down (which they look likely to do) you will be making a saving over the next few years.

OTK

Interest on a house loan is not dead money. It is a fee you pay to take a bet on the movement of your leveraged investment. You can win or lose big.

Regardless of the sums, renting is not a good option for long term living in Ireland. Your amateur landlord may interfere with your enjoyment of his property and even turf you out with the barest pretext and require you to live elsewhere, removing the incentive to nest and feel comfortable in a rented house. The bank will leave you alone so long as you make your payments.

Conclusion: rent for the short term, buy when you settle for the long term.

steo123

keep the posts coming guys-enthralling stuff

a lot of people i know are purchasing property and renting it,claiming they will be paying less then the 500 im forking out by renting room(s) out.

this is another factor to be considered when purchasing property

at least you can chose who you live with if you own the place

Calina

You can choose who you live with if you rent too. If you have to share when you buy then realistically you've lost one of the key advantages of buying ie not having to share.

mikemac

Calina wrote: »

You can choose who you live with if you rent too. If you have to share when you buy then realistically you've lost one of the key advantages of buying ie not having to share.

Buying a house and then taking in a lodger to help with the mortgage is kinda pointless imo.
I've spent years renting with strangers and if I ever buy a house on my own I hope I don't need a lodger.

I didn't come up with this quote but it's relevent.
If Bus Eireann bring you to work every day for 30 years you don't get a bus after 30 years. You paid a price for a service and rent is the very same.

I agree with others who posted that the OP paying €500 a month for rent isn't dead money and they should be saving some money every month.
However, someone paying €1500 for a swanky apartment when they are older or the mortgage payments are less will need to do some investigating and look at their options

dumbyearbook

starky wrote: »

Average hose price is what 350 400? In Dublin? Work out how much that would cost you over the space of 40 years! Way more then 500 in rent.

Average house prices in Dublin are around 400K, a 100% mortage for 420K over 25 years is about 2,400 per month.

total payable is about 720K.

(I havent checked these numbers by the way but they are near enough)

Colonel Sanders

dumbyearbook wrote: »

Average house prices in Dublin are around 400K, a 100% mortage for 420K over 30 years is about 2,400 per month.

total payable is about 640K which seems alot but your banking as is said above that in 15 years maybe the place will be worth 500K or whatever and could be sold, would'nt be too bad? Its all a chance too I suppose.

(I havent checked these numbers by the way but they are near enough)

I make 420k over 30 years to be €2,226 a month (using 5% APR, possibly a little on the low side for a 1st time buyer taking out a 100% mortgage). You pay back just over 800k over the course of the 30 year term assuming the APR remains constant

fricatus

Rent is dead money. Only the deposit isn't.

I've been reading this thread, with all the arguments about lost opportunity costs of not having the marginal amount a mortgage costs you, and negative equity, and choice, and an old-fashioned generational mindset and so on and so forth.

The fact is that when you take a mortgage out, you are crippled in the early stages, and it's generally more expensive than renting. However, that's only relevant if you're in the market for a quick buck, and I for one am not. I intend to live in my house for the rest of my days (I may move, but I'll be taking any accumulated equity with me).

You can give me all the arguments in the world about the short term, and fine, they trump mine. However, the only thing that matters in the short term is that you can afford the payments.

As time goes on, an individual will typically earn more each year, since most jobs award pay increases at or above the rate of inflation. However, assuming you stay in the same house, your mortgage will never go up. Granted it will fluctuate within a certain band along with interest-rate movements, but it will fall year-on-year as a percentage of your income, until it's almost negligible.

Take as an example, the parents of a friend of mine. In 1972 they took out a mortgage of about £3,000. The monthly repayments were about £17, which had the two of them saving every penny. By the time the term of the mortgage ended in 2002, the repayments would still have been about €22 or so per month (this on an asset worth €400,000 or so). However, my friend's father walked into the bank one day in early 2000 and asked if he could just pay off the rest of the mortgage. I don't recall the figure, but he could almost do so out of what he had in his ATM account.

Imagine if they were still renting...

punchestown

fricatus wrote: »

Rent is dead money. Only the deposit isn't.

I've been reading this thread, with all the arguments about lost opportunity costs of not having the marginal amount a mortgage costs you, and negative equity, and choice, and an old-fashioned generational mindset and so on and so forth.

The fact is that when you take a mortgage out, you are crippled in the early stages, and it's generally more expensive than renting. However, that's only relevant if you're in the market for a quick buck, and I for one am not. I intend to live in my house for the rest of my days (I may move, but I'll be taking any accumulated equity with me).

You can give me all the arguments in the world about the short term, and fine, they trump mine. However, the only thing that matters in the short term is that you can afford the payments.

As time goes on, an individual will typically earn more each year, since most jobs award pay increases at or above the rate of inflation. However, assuming you stay in the same house, your mortgage will never go up. Granted it will fluctuate within a certain band along with interest-rate movements, but it will fall year-on-year as a percentage of your income, until it's almost negligible.

Take as an example, the parents of a friend of mine. In 1972 they took out a mortgage of about £3,000. The monthly repayments were about £17, which had the two of them saving every penny. By the time the term of the mortgage ended in 2002, the repayments would still have been about €22 or so per month (this on an asset worth €400,000 or so). However, my friend's father walked into the bank one day in early 2000 and asked if he could just pay off the rest of the mortgage. I don't recall the figure, but he could almost do so out of what he had in his ATM account.

Imagine if they were still renting...

If I bought shares in Paddy Power plc. on 03rd Jan 2001, I would have paid €2.98 a share. If I held onto them until 13th November 2007 (aside from div. payments) I could have sold them for €27.25. That would have been a near ten fold increase on my investment. (like your friends parents original investment on their home) Is the person buying those shares on the 13th Nov 2007 going to see the same return on their investment as I did on my original purchase? Your logic dictates that they will because in an open market, prices will rise. At close of trading today, they were quoted at €18.80. That would be loss of about 33% (similiar to current housing market)
Imagine if the buyer had kept his capital in a high interest yield account, he would see about a 6% return on his investment as opposed to such a loss with the share buy. The housing market is flooded with geniuses following the same principles of investing in property because their own home saw such a return on the original price all those years ago. they are under the illusion that house prices must rise, rise, rise but there can be no givens in any such market.

antoinolachtnai

Saving in a bank account is just not tax-efficient. If you get 6 percent tax, 1.5 points of that is retained as tax. So your compound growth is much lower.

There is also no tax when you sell your house.

There are tax benefits to owning your own home and these are not insignificant.

revan23

didnt really read the full thread and this may be a bit simplistic, but if you go on holiday you don't buy a hotel... so if you want to live somewhere you don't have to buy a house. especially as house prices here are the wrong side of ridiculous. it's not dead money by any means.

DublinWriter

revan23 wrote: »

didnt really read the full thread and this may be a bit simplistic, but if you go on holiday you don't buy a hotel... so if you want to live somewhere you don't have to buy a house.

You're not comparing like with like.

The short-termism I see in people's thinking here astounds me.

For example, the whole argument about buying last year and losing shed loads of money while notable, is largely bogus when you look at the potential worth of your house in 25/30 years time.

All markets go through troughs and spikes and the residential property market is no different. However, graph the residential property market and you'll see that over the long term, or at least in any given 10 year time window, it always appreciates in value.

DublinWriter

Pa ElGrande wrote: »

For argument's sake you pay €500 in rent today, if you were to buy the place with a mortgage how much would it cost you - let's say €1200 a month for argument sake.

Just €500 in rent today? Where exactly are you talking about?

blah

DublinWriter wrote: »

Just €500 in rent today? Where exactly are you talking about?

Realistically I think the €500 gets you a room in a shared house, while the €1200 gets you full ownership of a property. (How big or where I don't know, any suggestions?)

I'm happy to live in London here for a few years, renting a room and saving a nice chunk. And in a while I may move out and live in a small apartment with my girlfriend. And then a while after that I might travel, or spend a year in Europe or Australia or where ever. And for the price I'm paying to put a roof over my head in each of those instances, I think I'm getting a pretty good deal. I can live in a nice enough place, meet some interesting people and see some interesting places. And when I'm done, I will have a nice chunk saved up to buy a house in Ireland for a possibly reasonable price. Hopefully I won't consider the rent I've paid over the previous years to be dead money.

Someone might suggest that I could have bought a place and rented it before leaving Ireland. But I'd probably be using my own money to make up the shortfall between rent and mortgage, and I'd be relying on friends or family to look after the place and handle the tenants for me. Not worth the hassle.

And I still think that the arguments that "renting is not dead money" still apply for someone who isn't moving around outside of Ireland like me, especially in the next few years.

Colonel Sanders

DublinWriter wrote: »

You're not comparing like with like.

The short-termism I see in people's thinking here astounds me.

For example, the whole argument about buying last year and losing shed loads of money while notable, is largely bogus when you look at the potential worth of your house in 25/30 years time.

All markets go through troughs and spikes and the residential property market is no different. However, graph the residential property market and you'll see that over the long term, or at least in any given 10 year time window, it always appreciates in value.

the long term is simply a series of short terms.

Over 30 years its unlikely a property will decrease in value but in a shaky market (such as ours is now) timing can be crucial (actually ignore that, timing is crucial in any market whether its a bull or bear market). The Paddy Power share price example was very appropriate. Over 30 years you will surely see an increase in the value of your home, no argument there. However if you time you're entry into the market correctly the returns will be higher and monthly mortgage payments lower.

Look at the development in Wicklow where prices dropped by 100k (can't remember the name of it). People who bought before the drop will surely be sitting on an asset worth more than they paid for it in 30 years time. However if anyone bought after the price drop they'll be sitting on an extra 100k profit and will have saved a substancial amount over the term of their mortgage (about 150k between interest and capital repayments would be a very conservative guess off the top of my head).

Btw I pay 400 a month for a room in a shared house in Dublin. Very happy here, close to work/city center/most major public transport links etc

Afuera

DublinWriter wrote: »

All markets go through troughs and spikes and the residential property market is no different. However, graph the residential property market and you'll see that over the long term, or at least in any given 10 year time window, it always appreciates in value.

The problem with property DublinWriter is that it typically has very long cycles. It could be in a trough for 20 odd years. It could spike for 10-15 years. It doesn't really make much difference to a person if the property is worth more over a hundred year period. It's not much fun being a property owner if you've been underwater for most of your working life just for that pleasure. It certainly limits your options anyway.

Afuera

DublinWriter, a quick question for you...

If someone was willing to offer you a permanent lease, until the day you die, to rent a property for EUR 2 per month, would you consider that dead money?

How about if they offered you the same offer for EUR 200 per month?

At what stage does it become dead money to you, or do you think it is always dead money to rent?

Calina

DublinWriter wrote: »

You're not comparing like with like.

The short-termism I see in people's thinking here astounds me.

For example, the whole argument about buying last year and losing shed loads of money while notable, is largely bogus when you look at the potential worth of your house in 25/30 years time.

All markets go through troughs and spikes and the residential property market is no different. However, graph the residential property market and you'll see that over the long term, or at least in any given 10 year time window, it always appreciates in value.

Historically, property has tracked inflation. The only long term study on the subject covered 300 years and it concluded that property tracked inflation. In the event of housing bubbles incidentally, property value downturns can last well over ten years. Japan, if I am not mistake, is still in the doldrums. Ten years, in property terms, is not the long term, it's the short term.

The problem is that you are missing a key feature of the property market in Ireland at the moment. Many FTBs are not buying property for the long term; they have been buying with a requirement to trade up in a number of years time, very often two or three max. As a result, short term movements in the market are critically important to them. If they were buying with a thirty year vision, then yes, you are right, the long term is worth looking at. Starter homes in the Dublin area, the one and two bedroomed apartments, are not viable long term homes because they are too small.

Values on starter homes in my estate are down 15% in the past twelve months.

That 15% means that unless the mortgagee had a substantial deposit and agressively paid off their mortgage principle, they will have difficulty in trading up unless they have additional funds to put into a trade up. As mortgage repayments have risen considerably over the past few years because of a disproportionate rise in interest rates (the difference between3% and 4% rates is disproportionately greater than the difference between 7% and 8%, for example, and the mortgage principles are at an historical high), people's capacity to save is somewhat more limited. Salary inflation, particularly in the private sector, is rumoured to be less than stellar.

It is important when buying a home for the long term that it is for the long term. In Dublin - in particular - this has not been the case because of the ladder mentality. Before yammering on about the long term and the short termism, you might pay attention to the kind of property concerned. In many cases, the property concerned is not a long term proposition and therefore common sense would dictate that short term factors such as the comparison of rent and mortgage interest would have a role to play also.

gurramok

fricatus wrote: »

Take as an example, the parents of a friend of mine. In 1972 they took out a mortgage of about £3,000. The monthly repayments were about £17, which had the two of them saving every penny. By the time the term of the mortgage ended in 2002, the repayments would still have been about €22 or so per month (this on an asset worth €400,000 or so). However, my friend's father walked into the bank one day in early 2000 and asked if he could just pay off the rest of the mortgage. I don't recall the figure, but he could almost do so out of what he had in his ATM account.

Imagine if they were still renting...

You've forgotten somehting. Inflation from 1972 to late 80's was at times hitting 20% hence that mortgage payment fixed at 17euro was a good idea.

However, inflation is mandated to be 2% p.a. in the eurozone we are part of so a mortgage payment of €1000+ will still be a chunk of a mortgage in 30 yrs time, just deflate it by 2%pa to get your figure of worth.

Of course if inflation hit upward to 20% again in next 30 yrs(who knows!), you can be right in that scenario

OTK

DublinWriter wrote: »

However, graph the residential property market and you'll see that over the long term, or at least in any given 10 year time window, it always appreciates in value.

Have you done this? From 1980-1989 Irish house prices declined 1.5% pa in real terms. As Calina has pointed out, long term analysis of house prices plotted against inflation show that prices approximately track inflation in the long term

The idea that high inflation will erode a mortgage is lovely so long as you can forget the 18%+ central bank interest rates in Ireland in the 1980s that went hand in hand wigth inflation.

Irish house prices since 1970 available from the DoEHLG
Inflation data from the CSO

fasty

Rent isn't dead money to me. I'm a few years away from buying a house of my own in an area I want and can afford. I'm saving away for it at the moment.

In the meantime, renting is fine, it's not dead money, it's the price of independance from mammy and daddy who deserve time to themselves!

dumbyearbook

Colonel Sanders wrote: »

I make 420k over 30 years to be €2,226 a month (using 5% APR, possibly a little on the low side for a 1st time buyer taking out a 100% mortgage). You pay back just over 800k over the course of the 30 year term assuming the APR remains constant

its over 25 years you managed to quote me in the two minutes it took me to edit it!

Its not a first time buyer mortage as i said the numbers are'nt exact they'lll change with interest rates anyway but over the 25 yrs its around 720 or so

Blisterman

If you're to buy a 400k house today, and it loses 10% of its value over the next 2 years, as conservative predictions say.
That's more or less 40k, you've lost. Much less than the cost of rent.
It's madness to buy a house now. Wait until the markets are more stable.

Rent isn't dead money if:
* You cannot afford to buy a property in an area in which you want to live.
* You don't intend to stay in a property you buy for very long, and are buying with the intent of making a quick buck.

Personally, my mortgage is around 100 euro more a month than rent on this house would be. So in my case, I'd rather pay interest on what will eventually be mine than rent.

However that's not the case with every buyer, every situation is different.