Buying a home, rather than renting, will save you almost €500 a month on a typical starter home in Dublin, Irish home builder Cairn Homes claimed on Tuesday.
The developer, which is currently marketing eight separate developments across the greater Dublin area, posted its full-year results on Tuesday, noting that the rapid upwards trajectory in rents means that it is now “significantly dearer to rent than own and finance a starter home in Dublin”. This is despite a similar rapid move in house prices, which are still growing at double digit rates.
Cairn Homes now estimates that the gap in the cost of owning a starter home, against renting an equivalent, continues to grow, and is up from € 419 per month or a differential of 32.5 per cent in September 2017, to € 494 per month or 37.3 per cent today.
This is based on a three-bed house at Cairn’s Parkside development on the Malahide Road. Back in 2014, the house would have cost € 295,000, but due to higher mortgage costs and lower rents, it would actually have been 8.3 per cent, or €112 a month, cheaper to rent. Fast forward to today however, and despite a higher purchase price, of €334,750, the same property is now almost €500 more expensive to rent, based on monthly mortgage repayments of €1,323, versus a typical rent of €1,323.
Unsurprisingly then, Cairn says “it is ideally positioned to continue to offer high quality new homes at competitive prices which will continue to attract customers who are paying excessive rents”.
While the cynic might suggest that it is in the interests of a developer such as Cairn to claim buying a home, rather than renting, makes financial sense, the figures do stackup - or kind of.
Consider the most recent rent report from Daft. It finds that a two-bed house in Dublin 2 will cost someone €2,063 in rent a month, or just €1,691 for a mortgage, based on a mortgage rate of 3.75 per cent - and given the downward trend in rates, the cost of this mortgage will likely actually be cheaper. Or how about a three-bed home in west Dublin - €1,595 to rent versus €1,158 to buy, or a three-bed in Cork city - €914 to buy versus €1,203 to rent.
However, the differential does start to narrow when you come to other locations - a three-bed home in the first-time buyer’s locale of Sandyford or Stepaside, in Dublin 18, for example, will cost you € 1,810 a month to buy - or €1,980 to rent, while you’ll save just €36 a month by buying over renting a three-bed in Galway city.
And when it comes to south county Dublin, it is actually cheaper to rent, rather than buy, a three, four or five bed property - the latter by a hefty €1,762 a month.
