Cheaper to buy than rent

Rents are at such a high in Offaly that in many cases, it now costs far more to rent than to buy, the latest figures from the property
website daft.ie, have revealed.

In the last three months alone, rental prices in Westmeath have risen by 3.7 per cent and over the course of the last year, rents in Westmeath have rocketed by a whopping 10.5 per cent.

This week, on the Daft.ie website there are just eight properties to rent in all of Tullamore, one in Birr, Clara, Banagher and Kilcormac and five in Edenderry. The figures also show a 31 per cent increase from when rental levels reached the trough, according to Daft.

The average rent in Westmeath is now €692. Other areas of the midlands have also seen huge hikes: Longford rents are up 14.7 per cent over the past twelve months; Westmeath is up 13.2 per cent, Kildare is up 13.4 per cent and Laois is up 13.6 per cent.

The site compares the cost of rent against the cost of buying, based on a 3.75 per cent variable mortgage over a thirty year term.
It finds that in Offaly, the mortgage on a one-bed apartment would be €232, while the rent is now €480. For a two-bed house, the rent is now €559. To buy would mean a monthly mortgage payment of €310.

Even further up the ladder, the same applies: someone buying a 3-bed house at today’s average cost in Offaly, would have a monthly mortgage of around €446. Even if the mortgage lending rate were to increase by 2 percentage points, the mortgage would come in at €561. By contrast, someone hoping to rent could anticipate a payment of €675.

It’s only at the stage of four-bed houses that it becomes cheaper to rent than to buy, with Daft.ie pitching the cost of the mortgage on a four-bed at €846, and the rent at €735. For a five-bed, the typical rent would be €825; less than the buying cost of €919.

The Offaly figures are broadly reflective of the national picture. Nationwise, average rents rose by almost 4 per cent in the third quarter, and the annual rate of rental inflation in Ireland is now 11.7 per cent, the highest recorded by the Daft.ie report since its series start in 2002.

Trinity College economist Ronan Lyons, author of the report, said that these latest figures make grim reading for most, including, he says, those renting and those in charge of Ireland’s housing system. He said the figures are having a disastrous effect on social cohesion as well as on Irish competitiveness.

Rents in some parts of Dublin are now 10 per cent higher than their peak, during the Celtic tiger days.