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Mortgage repayments cheaper than rent in all but two areas


It’s funny how we used to beat ourselves up about wanting to own a home, characterising it as some kind of Irish obsession. Most fanciful of all was that it stemmed from some colonial hangover about land, and that if only we could be more like our continental neighbours and rent, then all would be well.

These arguments – as quaint and idiotic as they now seem – were made in the lead-up to the 2008 crash. In the context of the soaring prices and rents we now see, it’s financially sane to want to buy. Repaying a mortgage on a typical three-bedroom home is now less expensive than paying rent in nearly every region in the country. Only in the two most expensive areas to buy – Dublin 4 and Dublin 6 – is repaying a mortgage costlier than renting.

According to the 2016 population census, 85 per cent of 65-year-olds owned their own homes, while just 14 per cent rented. Contrast that with the fact that an estimated 12 per cent of 25-39-year-olds – those of a prime working age – now own their own homes and you’ll better understand the term Generation Rent.

The great decline in home ownership was detailed in a report this week by the Parliamentary Budget Office, which noted that after the 2008 financial crisis, earnings declined and became stagnant while house prices and rents surged.

The mismatch saw home ownership decline by 10 percentage points to 67.6 per cent between 2007 and 2016, the report notes, while the number of households renting rose from 21 per cent to 28 per cent.

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“High prices relative to income are pushing potential buyers out of the market and into rental accommodation, social housing or emigration,” was the grim conclusion.

There are two fundamental forces fuelling the housing crisis here: supply and price. One is too low, the other too high. Economists argue that increased supply – it’s forecast to rise substantially in the next few years – will at the very least moderate housing price inflation, and if wage growth picks up affordability will improve, but that’s something of a slow-burn solution.

Without a big bang somewhere along the line we’re likely to continue in this vein for some time – cold comfort for those seeking to exit the so-called rent trap.


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