RENTING OR BUYING
COMPARISION OF COSTS
CASH BUYERS & MORTGAGE APPROVALS
This short comparision summary of the costs associated with renting versus buying a property does not allow for the costs associated with buying your house. These
costs
include property tax, legal fees,insurance, utility bills,
water charges and legal fees.
This particular summary is based on properties in the
Dublin region. The factors affecting the decision to
rent or buy in other parts of Ireland may apply if the
property price recovery spreads across Ireland in the near
future.
Over the last year and a half, the monthly cost
difference between renting and monthly mortgage
payments has reduced and this, along with the emergence
of cash
buyers, have been some of the factors causing
an upturn in the property market in recent months.
If you are a cash buyer, or have been approved for
a mortgage, it may be prudent to purchase a property with
good renting potential, in order to mitigate any negative
equity which may occur in the future.
Take an example of a new 2 bedroom apartment costing € 252,500 (including stamp duty) in South County Dublin and bought by a couple currently approved for a mortgage. Assuming the buyers have the necessary 10 per cent deposit from their own reserves, a 4.7 per cent interest rate on their mortgage and a 30 year term loan would cost them € 1178 monthly.
In the same area, the monthly rental cost for a similiar property would cost € 1,450, i.e. € 3,264 a year extra to rent.
By contrast, and
moving up the price ladder, on the same mortage terms as above, a house costing € 595,000 (including stamp duty), would incur monthly mortgage repayments of € 2,805. In the same area as the
€ 595,000 house, the monthly rental cost for a similiar property would cost € 1,875, i.e. € 11,160 a year cheaper to rent.
Sought after areas in Dublin areas have seen significant price increases of above 20 per cent in the last 12 months. The median asking
price in the first quarter of 2013 increased by 1.3 per cent to € 244,000 with general residential prices rising by more than 13 per
cent in the past 12 months.
By contrast, letting prices for Dublin houses during Q4 2013 averaged € 1,168. The average apartment rent in Dublin for the
same period was € 1,070. Over the last year, Dublin rents have increased by 7.6 per cent, with apartment rentals seeing an 8 per cent rise and house rentals increasing by 6.4 per cent.
The bottom line would seem to be, that as you move towards higher priced houses, you can save by renting rather than buying outright.
The information provided on this page is liable to change at any time. All information supplied by IrishHouse.ie/PropertyRegister.ie is subject to errors & omissions and does not constitute legal, investment or any other form of advice. Always obtain independent professional advice for your own particular situation.
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This summary is based on a recent article in the Sunday Business Post newspaper.
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