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is it better to save up for a house or take out a mortgage

armabelle

Ok so many people will obviously tell you that a mortgage is better than simply paying rent until you have saved up enough money to buy a house. I say it is obvious because of course, this is what people do. I think people could save up for a house if they save hard and live below their means but would this be better?

If you take an online mortgage calculator and see what it costs you to take out a 300,000 euro mortgage for example, and then see what your repayments are, and then add those repayments up you get a total of almost double the loan amount over a period of around 25 years. If you take what rent would cost you over a period of 25 years then maybe it would be better to take out a loan for your home but if you were a good saver and you could save a lot more and have enough to buy a home in 10 years, then wouldn't that be better than taking out a mortgage?

What are some other peoples thoughts about this? Essentially, I am asking, is it better to pay a landlord or pay the bank for its loan to you?

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armabelle

L'prof wrote: »

I used a mortgage calculator that was on my phone.

Just used BOIs mortgage calculator there and it actually works out cheaper.

€58726 interest over 10 years

So, if your rent is higher than €489pm you should seriously consider getting a mortgage based on the info you provided.

Thanks, We will consider that. Are there any other fees / expenses you have to consider when taking a mortgage?

KomradeBishop

armabelle wrote: »

Why is this? I thought just the rental market was a bad deal in dublin, which it is IMO

There are massive supply issues with property in the Dublin market - and both the private sector and government are MIA when it comes to resolving this - so the house prices and rents are skyrocketing.

lisasimpson

KomradeBishop wrote: »

There are massive supply issues with property in the Dublin market - and both the private sector and government are MIA when it comes to resolving this - so the house prices and rents are skyrocketing.

its also a massive problem in cork now. no new residential developments happening in city or surrounding areas. rents have rocketed since Christmas too

armabelle

KomradeBishop wrote: »

There are massive supply issues with property in the Dublin market - and both the private sector and government are MIA when it comes to resolving this - so the house prices and rents are skyrocketing.

When the crisis happened there was a ton of stuff that was left half built, can't they finish those developments? Or has that already been done?

Suryavarman

armabelle wrote: »

When the crisis happened there was a ton of stuff that was left half built, can't they finish those developments? Or has that already been done?

The cost of building a home has increased substantially since the beginning of the financial crisis. So it isn't profitable to finish those houses without a large increase in price.

Many of the ghost estates that are left are in locations that houses aren't needed. There are many ghost estates in Leitrim but few if any in Dublin.

armabelle

Suryavarman wrote: »

The cost of building a home has increased substantially since the beginning of the financial crisis. So it isn't profitable to finish those houses without a large increase in price.

Many of the ghost estates that are left are in locations that houses aren't needed. There are many ghost estates in Leitrim but few if any in Dublin.

Well now hasn't housing gone up and isn't it still going up so this should be incentive to get building but they aren't for some reason. This is a bit weird isn't it?

Also, why on earth did they build all those estates up there and in places where they are not needed?

Suryavarman

armabelle wrote: »

Well now hasn't housing gone up and isn't it still going up so this should be incentive to get building but they aren't for some reason. This is a bit weird isn't it?

Also, why on earth did they build all those estates up there and in places where they are not needed?

The actual cost of building a home is far higher than the price it can be sold for.

The population was growing rapidly and was expected to continue to do so. Things didn't work out like that.

armabelle

Suryavarman wrote: »

The actual cost of building a home is far higher than the price it can be sold for.

why, how can that be? I can't get my brain around it. And there are people coming into Dublin that can't find decent rentals so surely now is as good a time as any

Suryavarman

armabelle wrote: »

why, how can that be? I can't get my brain around it. And there are people coming into Dublin that can't find decent rentals so surely now is as good a time as any

Ronan Lyons (professor of Economics at TCD and chief economist at Daft) gives a good overview of the situation in this paper. He notes that the typical 3 bedroom home sells for €270,000 but costs €400,000 to build. He also mentions that the break even rent of the typical two bedroom apartment is €1,700 per month. Dublin 2 is the only area in the country where rents exceed €1,700 per month.

armabelle

Suryavarman wrote: »

Ronan Lyons (professor of Economics at TCD and chief economist at Daft) gives a good overview of the situation in this paper. He notes that the typical 3 bedroom home sells for €270,000 but costs €400,000 to build. He also mentions that the break even rent of the typical two bedroom apartment is €1,700 per month. Dublin 2 is the only area in the country where rents exceed €1,700 per month.

We pay that in ballsbridge for 55sqm

Suryavarman

armabelle wrote: »

We pay that in ballsbridge for 55sqm

That's fair enough but the average monthly rent in Ballsbridge for a 2 bedroom flat is still below €1,700

armabelle

Suryavarman wrote: »

That's fair enough but the average monthly rent in Ballsbridge for a 2 bedroom flat is still below €1,700

Most 2 bed apartments in nice neighborhoods are over 1700 now according to this

https://www.expatistan.com/cost-of-living/dublin

Suryavarman

armabelle wrote: »

Most 2 bed apartments in nice neighborhoods are over 1700 now according to this

https://www.expatistan.com/cost-of-living/dublin

Daft's 2015 Q4 rental report says that average rents for a 2 bed house fail to exceed €1,700 anywhere in Ireland. Although they come closest in D4 and D2.

mirrorwall14

Suryavarman wrote: »

Ronan Lyons (professor of Economics at TCD and chief economist at Daft) gives a good overview of the situation in this paper. He notes that the typical 3 bedroom home sells for €270,000 but costs €400,000 to build. He also mentions that the break even rent of the typical two bedroom apartment is €1,700 per month. Dublin 2 is the only area in the country where rents exceed €1,700 per month.

400k to build? What? That has to be based on looney land prices from the boom?

These figures and his percentages for 2012 and 2014 appear to be based on a firm of project managers and architects called Walsh Associates. Could he not have found a more appropriate and less likely to tend to bias source?

bilbot79

It's a pure numbers game. Rent a room in a crap houseshare then you're better off renting. Buy a mediocre house and pay off quickly and you're better buying. Check the amount which represents interest and compare it to the alternative rent. Interest is just rent to the bank but bear in mind that rent goes up over time but interest cam go up or down

Suryavarman

mirrorwall14 wrote: »

400k to build? What? That has to be based on looney land prices from the boom?

These figures and his percentages for 2012 and 2014 appear to be based on a firm of project managers and architects called Walsh Associates. Could he not have found a more appropriate and less likely to tend to bias source?

What exactly is wrong with the estimates that they provided? Would you have preferred him to ask his local shopkeeper? No bias there. It seems pretty sensible to quote experts in the industry when discussing such matters.

Would you prefer him to use the Department of the Environment's index that only measures materials and labour costs which showed a 70% increase in build costs between 1997 an 2014? How about the Society of Chartered Surveyors that also include professional fees and regulatory standards that showed a 150% increase in that timeframe? The Walsh Associates figures give broader estimates and therefore their estimates are more accurate.

KomradeBishop

It's not appropriate to use data from people with such an obvious conflict of interest. Including highly-inflated site costs in build costs is very misleading for starters.

There are a ton of sites presently lying undeveloped in Dublin - about 61 hectares - slap a very hefty yearly tax on these undeveloped sites, and you'll see the site costs coming down fast.

Suryavarman

KomradeBishop wrote: »

It's not appropriate to use data from people with such an obvious conflict of interest. Including highly-inflated site costs in build costs is very misleading for starters.

There are a ton of sites presently lying undeveloped in Dublin - about 61 hectares - slap a very hefty yearly tax on these undeveloped sites, and you'll see the site costs coming down fast.

Why isn't appropriate? Why would they falsify figures? What is your qualification to decide what is and isn't appropriate? Why should we care about your opinion more than the opinion of a professor in economics? Why is it misleading to include a major cost factor when working out how much it costs to build something? Why are you bringing up site costs when it is explicitly stated that site costs are omitted? What figures should we then use? Or are all figures biased unless they conform to your world view?

KomradeBishop

Uh, yea - some people with a monetary or professional conflict of interest falsify figures all the time. That's why conflicts of interest are an ethical concern.

I view 'arguments from authority' very dimly - they are inherently fallacious.

You're right that site costs were factored out of the Ronan Lyons figures, I missed that - he doesn't provide base stats, so I can't verify this though.

However, if you look at actual quotes for house builds - and these are large houses, often once-off builds (which cost more to build than a large development) - then the build prices are arguably a good half of what is quoted in Lyons paper.

His stats in that paper are not well sourced, and he doesn't provide base stats - so I'm not going to take his data as accurate. If he did things properly, he'd get stats from actual housing developments, in aggregate, and see what the raw building cost figures are on average.

Suryavarman

KomradeBishop wrote: »

Uh, yea - some people with a monetary or professional conflict of interest falsify figures all the time. That's why conflicts of interest are an ethical concern.

I view 'arguments from authority' very dimly - they are inherently fallacious.

You're right that site costs were factored out of the Ronan Lyons figures, I missed that - he doesn't provide base stats, so I can't verify this though.

However, if you look at actual quotes for house builds - and these are large houses, often once-off builds (which cost more to build than a large development) - then the build prices are arguably a good half of what is quoted in Lyons paper.

His stats in that paper are not well sourced, and he doesn't provide base stats - so I'm not going to take his data as accurate. If he did things properly, he'd get stats from actual housing developments, in aggregate, and see what the raw building cost figures are on average.

Why would they falsify figures? What benefit is there from falsifying figures?

Wow. So you expect him to reference Boards posts instead of industry professionals?

I will admit his data isn't very well sourced. The Department of the Environment, the Society of Chartered Surveyors Ireland and Walsh Associates aren't exactly some random poster on Boards. I can't believe he didn't ask for the opinions of random posters on Boards. You should shoot him an email and tell him how to do his job properly. Don't forget to scold him for using "biased" sources.

KomradeBishop

Look, I don't have to convince you of anything, you have to convince me and other posters that conflicts of interest are not a problem.

There is a very very long track record, of conflicts of interest being a valid ethical problem - you only have to do minimal reading to see this:
https://en.wikipedia.org/wiki/Conflict_of_interest

The DoE source above - more reliable than the other sources - gave a far lower figure for the cost of building homes, than the one Lyons based the overall report on.

Suryavarman

KomradeBishop wrote: »

Look, I don't have to convince you of anything, you have to convince me and other posters that conflicts of interest are not a problem.

There is a very very long track record, of conflicts of interest being a valid ethical problem - you only have to do minimal reading to see this:
https://en.wikipedia.org/wiki/Conflict_of_interest

The DoE source above - more reliable than the other sources - gave a far lower figure for the cost of building homes, than the one Lyons based the overall report on.

So I have to prove a negative but you don't have to provide any evidence for your claims? You are the one asserting something here. You are the one that has to back up their (baseless) claims.

Suryavarman

KomradeBishop wrote: »

Look, I don't have to convince you of anything, you have to convince me and other posters that conflicts of interest are not a problem.

There is a very very long track record, of conflicts of interest being a valid ethical problem - you only have to do minimal reading to see this:
https://en.wikipedia.org/wiki/Conflict_of_interest

The DoE source above - more reliable than the other sources - gave a far lower figure for the cost of building homes, than the one Lyons based the overall report on.

Linking to Wikipedia doesn't explain why we should choose a figure that leaves out a whole hose of cost factors for building a home either.

KomradeBishop

Suryavarman wrote: »

So I have to prove a negative but you don't have to provide any evidence for your claims? You are the one asserting something here. You are the one that has to back up their (baseless) claims.

Eh, yea the wiki link has a ton of evidence and examples. You don't get to engage in 'special pleading' where you try to discount that link.

You don't know what 'prove a negative' means - when evidence is provided for a positive claim, the burden of proof shifts to you to refute that.

You're making the claim lacking credibility here - you're downplaying the idea that conflicts of interest are an ethical concern - i.e. you're implicitly claiming they aren't an ethical concern.
The burden of proof lies with you, to discount the evidence showing they are a concern - merely making a rhetorical playact of acting 'unconvinced' isn't a refutation of anything, you have to convince other posters, now that the burden of proof is on you.

If you try to use rhetorical/evasive/obstructionist tactics to evade acknowledging that conflicts of interest are a valid ethical concern, or to try and reverse the burden of proof, I'm going to pick them apart in extensive detail - so you'll just be wasting time/thread-space there.

I don't have any interest in that kind of waste of time, but I'm not going to just let anyone away with that kind of obstructionist tactic - especially when a particular band of posters are well known for it...

armabelle

Conflict of interest is a big problem in today's world. Luckily in Europe it is marginally better than in some other countries like the USA where if a surgeon tells you he must operate on your liver, it may be because he has to pay off his Mercedes. I think Capitalism is at fault but we have yet to design a better system for ourselves.

Suryavarman

KomradeBishop wrote: »

Eh, yea the wiki link has a ton of evidence and examples. You don't get to engage in 'special pleading' where you try to discount that link.

You don't know what 'prove a negative' means - when evidence is provided for a positive claim, the burden of proof shifts to you to refute that.

You're making the claim lacking credibility here - you're downplaying the idea that conflicts of interest are an ethical concern - i.e. you're implicitly claiming they aren't an ethical concern.
The burden of proof lies with you, to discount the evidence showing they are a concern - merely making a rhetorical playact of acting 'unconvinced' isn't a refutation of anything, you have to convince other posters, now that the burden of proof is on you.

I apologise but that Wikipedia link is quite long. Could please tell me where it discusses Walsh Associates?

You haven't provided any evidence though. You're just saying that the Walsh Associates figures are wrong and not saying why they are wrong. Saying that conflicts of interest exist doesn't mean they are a concern here. Proving that conflicts of interest exist in general isn't the same as proving they exist in this instance.

The onus is on you to prove why the Walsh Associate figures are incorrect. Alternatively you could provide other figures that contradict the figures from Walsh Associates.

You can continue to lazily claim bias every time you come across something that gets in the way of your ideology but that doesn't exactly lead to constructive debate.

If you try to use rhetorical/evasive/obstructionist tactics to evade acknowledging that conflicts of interest are a valid ethical concern, or to try and reverse the burden of proof, I'm going to pick them apart in extensive detail - so you'll just be wasting time/thread-space there.

I don't have any interest in that kind of waste of time, but I'm not going to just let anyone away with that kind of obstructionist tactic - especially when a particular band of posters are well known for it...

Wow. That was the most self-important thing I've ever read. You're like an internet superhero. Committed to upholding the standards of debate on discussion forums everywhere. When's the big screen adaptation of your story coming?

KomradeBishop

I've said Walsh Associates have a conflict of interest (due to their property industry ties), and I've explained how a conflict of interest is an ethical concern that pours doubt on what a source claims - and the Wikipedia link backs up, conflicts of interest being an ethical concern. You didn't miss this though, you're intentionally being obtuse about it, to string-out the discussion so you can avoid acknowledging the conflict of interest.

I never claimed they are wrong, I've pointed out their conflict of interest, and how that makes them an unreliable source.

There are figures that contradict Walsh Associates: The Department of the Environment figures.

You don't know what an 'ideology' is - pointing out conflicts of interest, is not 'ideological'.

I don't like it when I see dishonest debating tactics on a forum, especially when people supplement this with heavy condescension/snark when called out on that - in order to try and obstruct/control debate - and most especially when coming from a group known to play down issues such as fraud and conflicts of interest, because it suits their self-interest-based ideology; that's guaranteed to get me to engage more, not less, to debunk that nonsense.

c montgomery

My friend recently built a 4 bed dormer bungalow on his own land. Finished Nov 2015.

180k in total build costs including driveway tarmacked and shed, house is just over 2000sqfeet. Nice kitchen and everything done to good standard.

The build costs I'm hearing quoted are ridiculous. Economics of scale tell you it should be possible to build a decent house for 250k including land, if land was about 100k.

More land should be zoned for development, there's no shortage of it. If more was zoned there would be competition for development land reducing prices.

The central bank should hold tough on their rules, we need more supply not more money which will increase prices without affecting supply.

Suryavarman

KomradeBishop wrote: »

I've said Walsh Associates have a conflict of interest (due to their property industry ties), and I've explained how a conflict of interest is an ethical concern that pours doubt on what a source claims - and the Wikipedia link backs up, conflicts of interest being an ethical concern. You didn't miss this though, you're intentionally being obtuse about it, to string-out the discussion so you can avoid acknowledging the conflict of interest.

I never claimed they are wrong, I've pointed out their conflict of interest, and how that makes them an unreliable source.

You're continuously avoiding pointing out what exactly Walsh Associates have to gain from falsifying figures. You just lazily bleat about conflicts of interests because you don't like what they say.

There are figures that contradict Walsh Associates: The Department of the Environment figures.

They don't contradict the Walsh Associate figures though. They measure different things. It's clearly stated in the paper that the Department of Environment figures leave out a number of variables that contribute to the cost of building a house.

You don't know what an 'ideology' is - pointing out conflicts of interest, is not 'ideological'.

I do know what an ideology is. For instance your ideology is that every ill in the world is caused by the wealthy being corrupt, exploiting workers or hoarding wealth. Anyone that then gets in the way of that narrative is biased which automatically makes their opinions worthless. You of course never have say why exactly their opinions are worthless. The fact that you are a paragon of honesty free from bias makes these things obviously true.

I don't like it when I see dishonest debating tactics on a forum, especially when people supplement this with heavy condescension/snark when called out on that - in order to try and obstruct/control debate - and most especially when coming from a group known to play down issues such as fraud and conflicts of interest, because it suits their self-interest-based ideology; that's guaranteed to get me to engage more, not less, to debunk that nonsense.

And yet you regularly rely on lazy, dishonest debating tactics.

armabelle

c montgomery wrote: »

The build costs I'm hearing quoted are ridiculous. Economics of scale tell you it should be possible to build a decent house for 250k including land, if land was about 100k.

I am not disputing you by asking this but how come you see really nice 4 bedroom houses all across ireland for sale for like 100,00k with gardens and the land included?