How to understand the Irish property market when you're not Irish?

OJS.Fisher

Hi lads,

As stated in the title, I'm not Irish but French (désolé...) and I've been living over here since 2011 (in Cork, Dublin and even Belfast...) and the truth is I'm not planning to go back to France anytime soon since I'm really enjoying this country. But still, there's few things that I don't get.

For example, on the continent (especially in France, but also in Belgium or in Germany) you stop flat sharing once you've got your first job. You would basically only do it when you are a student (and that's actually only when you really don't have any money.)

In Ireland, I got that is not the case, you'll have to be in couple to rent your own place. If you really want to live on your own, best case scenario you can rent a tiny and overpriced studio for something like 800€ in the city centre.

Fair enough, this Ireland. I want to live here? Then, I'll have to deal with it.

After studying Daft's last quarter report, I realized that for the same type of property, it is cheaper to repay a mortgage than to pay a rent. (Don't hesitate to correct me if I'm wrong.)

So let's forget that I'm not Irish for a second. Instead, I would be a dub, mid-20sn having a permanent contract with an IT firm, earning between 30-35k a year, having saved 30k and currently paying 700€ to share a flat in the city center. I realize that I want to be truly independent and live on my own.

Why would it not be advantageous to get a 20 years mortgage to buy a cheap 1 bedroom flat that needs to be refurbished (for example, this: daft .ie/sales/17-block-a-the-glen-bettyglen-watermill-road-raheny-dublin/1015944), instead of throwing money out the window into rents? Sure, you would have to pay interest but is the ratio "rent + savings" vs "mortgage repayment" really that bad?

Maybe I'm not clear enough here, so here's an example:

I make 2200€ a month. My rent (including bills) is around 800€ and I manage to save (mainly for a mortgage deposit) 600€, so a total of 1400€.

I have a 20 years mortgage for the flat above and pay around a 1000€ a month + the fact that I really want to save money, let's say around 400€. Again, a total of 1400€.

Life is life and my lovely Irish lassie and I have a kid together and we need at least a two bedrooms flat. In 5 years, I would have repaid a certain % of my mortgage and saved around 24000€. If I was renting or more exactly flat sharing, I would have saved around 36000€.

Maybe it is more interesting to rent, but again if you are alone, you'll have to flat share. So you might have to pay a bit more but you get your own place and don't have to share it with anyone anymore.

For sure, my way of thinking is too simplistic (as I didn't mention property tax, stamp duty in case I move) but is it really a bad thing to want to buy something in Dublin?

Ps: I'm not actually looking to buy anything soon, but I'm trying to see what could the best option in few years.

BeatNikDub

It doesn't make any sense whatsoever I am afraid.

The Spider

OJS.Fisher wrote: »

Hi lads,

As stated in the title, I'm not Irish but French (désolé...) and I've been living over here since 2011 (in Cork, Dublin and even Belfast...) and the truth is I'm not planning to go back to France anytime soon since I'm really enjoying this country. But still, there's few things that I don't get.

For example, on the continent (especially in France, but also in Belgium or in Germany) you stop flat sharing once you've got your first job. You would basically only do it when you are a student (and that's actually only when you really don't have any money.)

In Ireland, I got that is not the case, you'll have to be in couple to rent your own place. If you really want to live on your own, best case scenario you can rent a tiny and overpriced studio for something like 800€ in the city centre.

Fair enough, this Ireland. I want to live here? Then, I'll have to deal with it.

After studying Daft's last quarter report, I realized that for the same type of property, it is cheaper to repay a mortgage than to pay a rent. (Don't hesitate to correct me if I'm wrong.)

So let's forget that I'm not Irish for a second. Instead, I would be a dub, mid-20sn having a permanent contract with an IT firm, earning between 30-35k a year, having saved 30k and currently paying 700€ to share a flat in the city center. I realize that I want to be truly independent and live on my own.

Why would it not be advantageous to get a 20 years mortgage to buy a cheap 1 bedroom flat that needs to be refurbished (for example, this: daft .ie/sales/17-block-a-the-glen-bettyglen-watermill-road-raheny-dublin/1015944), instead of throwing money out the window into rents? Sure, you would have to pay interest but is the ratio "rent + savings" vs "mortgage repayment" really that bad?

Maybe I'm not clear enough here, so here's an example:

I make 2200€ a month. My rent (including bills) is around 800€ and I manage to save (mainly for a mortgage deposit) 600€, so a total of 1400€.

I have a 20 years mortgage for the flat above and pay around a 1000€ a month + the fact that I really want to save money, let's say around 400€. Again, a total of 1400€.

Life is life and my lovely Irish lassie and I have a kid together and we need at least a two bedrooms flat. In 5 years, I would have repaid a certain % of my mortgage and saved around 24000€. If I was renting or more exactly flat sharing, I would have saved around 36000€.

Maybe it is more interesting to rent, but again if you are alone, you'll have to flat share. So you might have to pay a bit more but you get your own place and don't have to share it with anyone anymore.

For sure, my way of thinking is too simplistic (as I didn't mention property tax, stamp duty in case I move) but is it really a bad thing to want to buy something in Dublin?

Ps: I'm not actually looking to buy anything soon, but I'm trying to see what could the best option in few years.

To be honest, you can't afford that flat on 35k a year, (also that flat has only 1 bedroom), not talking about repayments, I'm talking about what the bank will lend you, first off teh bank will lend you three times your income max, so that's 105'000 euro's, that flat is for sale at 160'000 so you'll have to come up with 55 grand yourself.

the bank will also only lend you 90 percent of the value of a property, so if by some miracle you find one in dublin for 100'000, the bank will only give you 90'000 and you'll have to find the other 10'000 yourself.

All of the above is based on your salary, if your missus is working and you go in joint well then things change.

Sorry but at 35k you can't afford to buy in Dublin.

OJS.Fisher

Ah don't be sorry! It's always good to face reality, so you can see where you go.

Michael D Not Higgins

I think you're underestimating the costs of owning, to be honest. Let's say you buy the 160k flat with 30k deposit.

First of all you don't meet the Central Bank of Ireland regulations for the Loan-To-Income ratio.

On a 20 year mortgage at 4.2% you'd be paying just over €800/month but that doesn't take management fees, insurance, maintenance costs, bills, refurbishment costs, etc. into account, which could (and very likely would) be over the €1k/month suggested by your example.

Let's say your actual costs are €1200/month. That means you're saving €200/month and have savings of 12k and have paid back the principal of 23k at the end of 5 years. That's 35k total before we look at gains or losses in property price. Saving €600 a month nets you 36k after 5 years and you have the flexibility of renting and most likely a nicer and larger space to live in.

lima

You'd probably have to go to the outskirts of the city to afford something:

http://www.myhome.ie/residential/brochure/39-cooldriona-court-swords-co-dublin/3076421
http://www.myhome.ie/residential/brochure/36-holywell-rise-swords-north-county-dublin/2990831
http://www.myhome.ie/residential/brochure/49-turvey-woods-donabate-co-dublin/1828764

dori_dormer

Also where are you getting this deposit money from? Not even counting the refurbishment money, or solicitor costs etc.

If you are just out if college, and starting a new job you are broke. Even if you could save 600 a month. THats 5 years of saving. That's hoping you never have a large bill, or go on holiday, assuming you already somehow own a car and it never breaks down or needs replacing.

Also it makes you about 27 minimum when you are looking to buy, and ad lot of people would be looking to settle down or at least looking to the future then and would likely be more interested in a house than an apartment.

Cen taurus

The novelty of Ireland, and the Irish, will wear off soon enough.
Save your money, and buy something twice as good for half the price in a nice area of France, and give your kids, and theirs a better future.

hfallada

OJS.Fisher wrote: »

Hi lads,



For example, on the continent (especially in France, but also in Belgium or in Germany) you stop flat sharing once you've got your first job. You would basically only do it when you are a student (and that's actually only when you really don't have any money.)

I have lived in Germany and WGs(which is a flat share) is the norm in a lot cities. German apartments are usually 2/3 bedroom, which make them unaffordable on your own. I knew plenty of people with decent paid jobs living in WGs in Munich. Even my manager said she thought when she is older, that she would live in a WG outside Munich on a farm, as its very social.

Ireland doesnt have a lot 1 bed room apartments. Most of Dublins housing stock is either houses or 2 bedroom apartments. You dont really have choice not to share,as there is a lack of 1 bedroom apartments in the city. Even luxury apartments being built now are all 3/4 bedroom for high paid professionals. I dont see an issue with sharing, if its a large apartment with ensuite bedrooms. I just isnt that profitable to built 1 bed apartments.

mickman

The Spider wrote: »

To be honest, you can't afford that flat on 35k a year, (also that flat has only 1 bedroom), not talking about repayments, I'm talking about what the bank will lend you, first off teh bank will lend you three times your income max, so that's 105'000 euro's, that flat is for sale at 160'000 so you'll have to come up with 55 grand yourself.

the bank will also only lend you 90 percent of the value of a property, so if by some miracle you find one in dublin for 100'000, the bank will only give you 90'000 and you'll have to find the other 10'000 yourself.

All of the above is based on your salary, if your missus is working and you go in joint well then things change.

Sorry but at 35k you can't afford to buy in Dublin.

Its 3.5 x times his income. Thats 122500 so the OP would need 40k himself - not outside the realms of impossibility

mickman

Cen taurus wrote: »

The novelty of Ireland, and the Irish, will wear off soon enough.
Save your money, and buy something twice as good for half the price in a nice area of France, and give your kids, and theirs a better future.

silly comment. why dont you up and leave so if things are so bad here?

The simple fact is that Ireland is a fantastic place to live and rear a family.

lima

mickman wrote: »

silly comment. why dont you up and leave so if things are so bad here?

The simple fact is that Ireland is a fantastic place to live and rear a family.

I don't see it as silly as France is one of the greatest places to live on the earth (if you're French)

The_Morrigan

Cen taurus wrote: »

I notice you hadn't even the honesty to quote my edited post, that was edited long before you posted this. Says it all really. As the carer of an elderly relative, I don't have the option to.

I don't know what you're looking at, but mickman quoted your post as it is currently seen, it was last edited last night - his post is not edited.

Don't start picking fights.