Being home-less has its upside – no worry about mortgage rates

Una Mullally

At the risk of making this sound like an open letter to my mother: I told you so. After years of being berated for not investing in property, many liberated renters like myself can now lie back in our roof-top gardens and watch the housing market crash around us, while rent gets a few per cent cheaper every couple of months. Ain't life a peach?

I am staunchly against the buying of property. Nothing is going to convince me to buy. I think there is a simple logic to not buying property in Ireland: it's just not worth it. It's very difficult to justify buying a two bedroom duplex in some makedy-uppity development named after a tree like 'Willowville', 'Oakyniceplace', 'Shinybeechmews' – despite the fact that the only sign of foliage within a five-mile radius is an evergreen air freshener in a building site prefab– when you compare prices internationally. You can buy tropical islands for the price of an Irish bedsit. And sure, the comparisons might be a bit unrealistic, as in, you're never going to actually buy that tropical island for €400,000 anyway, but it's the principle of the thing. The average price of a house in Ireland is €300,000. And I'm sorry, but that's just having a laugh. I'm not going to be the punch line.

Now the added bonus of being right, and not succumbing to societal pressure of getting on the property ladder, sweetens the deal. Renting was previously a life usually ascribed to flakes, reality deniers, the broke, bold and immature. But it's pretty sweet listening to all this doom-and-gloom stuff about mortgages going ballistic while the price of a house ticks down by the minute like some sick stopwatch in reverse. No worries for me. Smug? Absolutely.

People in their 20s and 30s who were bullied into buying property when prices were at their highest are now stuck with one-bedroom apartments on the side of commuter-belt motorways, while after years of being told rent was dead money, or that renters were throwing money down the drain, making mean landlords rich and getting nothing for a monthly investment, it appears those who haven't bought are the smart ones.

There is a certain delight for the house-less in watching George Lee donning his grim property reaper outfit on the Six One News and forecasting rapidly falling house prices and rising mortgage interest rates. I know that sounds horrible, and really, one shouldn't be revelling in the misfortune of others, but it makes up for the years of nagging from the world about "when are you going to buy a place?" "when are you going to get on the property ladder?" "wouldn't it be nice to have a place of your own?"

Renters and owners are two very different tribes. Owners are much like people with a new baby. They become total bores, talking about tiles for hours, crying when Habitat closed, debating the merits of Dunnes Home, swapping mobile phone numbers for builders, spending entire weekends wandering around Ikea in Belfast like flat-pack zombies, and actually thinking that grouting is interesting. Renters are Celtic Tiger nomads, roaming Daft.ie, making friends, enemies, discovering new lands, and neighbourhoods you never knew existed, dealing with showers in sitting rooms, 'double rooms' that are in fact closets, 'studio apartments' that have kitchens in wardrobes and one washing machine between 14 apartments, before settling on somewhere shiny and central that could never realistically be afforded for purchase.

Ultimately, it's a choice between freedom and attachment, being tied down or not. The historical obsession with owning land and property here is a haze that clouds the benefits of long-term renting. How can it be money down the drain when you're living in a great place convenient for work and socialising, and when you don't have to spend money on appliances or maintenance or bin charges or renovations? When you enjoy renting, after a while, buying somewhere sounds like an obnoxious concept. The only thing owning seems to have in its favour is security, but hey, it's not very secure when the arse falls out of the market, is it?

Okay, so fine, in the last short while in my own gaff, renting in Dublin 1 has led to a total of one mugging, two broken presses (most new shiny apartments are actually rush built with a cunning mixture of PVA glue and prayers, leading door handles to come off in your hands and plugs positioned in unreachable places), some very entertained builders who treat the view through our floor-to-ceiling windows like an episode of Big Brother, and one extremely upset ground-floor language school which we accidentally flooded with a few long and enthusiastic showers. Oops. But on the plus side, we don't have to pay any attention to ANYTHING George Lee says. It's very comfy in this responsibility vacuum.

umullally@tribune.ie

July 6, 2008

Comments

#1 james commented, on July 6, 2008 at 4:23 p.m.:

Well done on dodging the bullet Una. Such a shame that the morkesh for overpriced shoeboxes has run into a spot of bother. Tis a scandal I tells ya. If only there was something more that Fianna Fail could do to help their builder developer cronies get rich at the expense of young workers.

#2 Sarah commented, on July 6, 2008 at 5:38 p.m.:

You say you are totally against buying property. But when prices return to realistic levels will you buy?

#3 Glenn commented, on July 6, 2008 at 5:51 p.m.:

Realistic as in 2.5 to 3 times salary?

#4 Paul commented, on July 6, 2008 at 8:05 p.m.:

Or perhaps realistic as in 14 to 18 times annual (falling) rent roll for the same property?

#5 ray commented, on July 6, 2008 at 8:11 p.m.:

Well done Una for writing about what a not insubstantial number of young people feel but why did you not do this last year or the year before. It will now come across as an effort at gloating as opposed to solid advice that you don't have to buy property at a ridiculous price.

#6 Testy commented, on July 6, 2008 at 10:19 p.m.:

Lots of your so called friends are going to hate you for this article Una .

That's the price you must pay just for being right in property obsessed Ireland .

#7 Andrew commented, on July 6, 2008 at 10:52 p.m.:

Finally, somebody tells it as it is from the perspective of the renter. There have been other experts trying to tell people but nobody would listen. I do agree with ray however. Why didn't you write this a few years ago? Maybe your editor would have refused to print it?

#8 Shan Mohangi commented, on July 7, 2008 at 12:08 a.m.:

If young people saved their money instead of spending it on drink, drugs, mobile phones, ugg boots, and foreign holidays they could afford a mortgage. Now they've blown it. Have fun working in Poland losers. The USA won't take you.

#9 Desmond commented, on July 7, 2008 at 5:40 p.m.:

Ha ha, this is a good article. And quite perceptive. Sick of people telling me I had to buy. Had a €25,000 deposit together in 2003, didn't buy but had a great time round the world twice (only cost me €14G for two trips of 8 months each). Could have bought but my salary was only €35 G in '03, so would have meant a major struggle for my whole 20's. Not bought still and have €160,000 cash (prudent saving i.e. no Ugg's, no NYC, no car, no foreign holidays) and a salary of €110,000 a year now (cause I can always live 15 mins from work and do loads of overtime (1 hr per day) while others are using their time to commute (3 hr per day)). What the point of screwing yourself in your 20's over some silly house or flat?? Enjoy life. Easy come, easy go!

#10 Theresa commented, on July 7, 2008 at 9:09 p.m.:

Una, you write as if you were reading my mind! To all those who lectured me and tried to scare me into buying, I heave a huge sigh of relief!!! I rent a house I could not afford to buy at present and will not buy until prices come down to a sensible level. Which they are still miles away from. And to those who think that rising interest rates are bad for potential FTBs, they're not! They're good for 2 reasons:

1. The higher interest rates go, the less banks will lend everyone and the more prices will fall - excellent. Better to buy at the top of the interest rate cycle and the bottom of the house prices cycle.
2. We get better interest on our savings! This in particular is making me very happy. :)

I think people think that FTBs are stupid and that this crash is scaring us. It's not, we are thrilled by it.

Here's to missing out on lots of yucky negative equity, good on you Una!

#11 SP commented, on July 8, 2008 at 1:23 a.m.:

Only someone in their early 20s (I'm guessing here) would write 'I'm never going to buy'... it's just like 'I'll never marry' and 'someday, I'll write a great novel'...blah, blah... You have (and I'm guessing again), no major financial outlay other than a few odd coctkails and maybe a small car loan (guessing again); probably would like to travel for a year like most post-college youngsters and have absolutely no clear idea where you'll be in 5 years time but don't mind. That's all fine.

But given all the above (and as a young lass in her 20s I'm guessing you aren't paid enough to afford a one-bed in Kazakstan anyway) you're not really in the house-buying category so why bother with the pointless nose-rubbing to those who are a bit older and have bought in the last few years!!??

#12 Owen commented, on July 8, 2008 at 11:07 a.m.:

I enjoyed your article, though you should try and include the real comparison of renting long term vs home ownership - ie. rental costs vs mortgage interest repayments. These are the 'dead money' costs to having shelter via renting or home ownership.

Of course I agree with your non-buying attitude at the moment because rental costs is less than mortgage interest repayments on the same place. Eventually it will swing the other way, and when it does it would be a good time to buy if personal circumstances dictate that settling down is more desirable than leading the nomad lifestyle.

#13 David Kelly commented, on July 8, 2008 at 1:51 p.m.:

SP, this girl is probably rubbing your nose in it because over the last few years she and all renters are sick of hearing "Ohh I got in on the property ladder early" "Oh my house has gone up by €XXX thousand since I bought it a day/month/year ago". It was gratuitous gloating based on a false assumption i.e. that property prices were on a constant upward spiral. Don’t say you weren’t warned, you were. By numerous economists here and elsewhere. George Lee pointed out last year that 100% mortgages was No.7 and last on the 7 steps to an OCED property bubble crash. Yet all people wanted to talk about was “soft landing”. The same people are now on about an upswing in the medium term. Not a chance.
In Japan, retail property (2004) was in the region of 1/1000th of what it was in 1989. Housing was 1/10th in 2004 of what it was in 1989. It won’t go as bad here but it is a pointer to the future.

Comments

Comments closed

Also in Editorial Opinion

Share this article

Search

This issue 5 years ago

RSS Feeds