This morning’s house price statistics from the Central Statistics Office show that house prices nationally are continuing to decline, and in fact have declined in each of the last 52 months – “months”, not “weeks”, though in June and July 2010 the index did remain flat. In not one month since September 2007 have prices nationally risen. And there is a body of opinion which says thatIrelandhas so many supports and distortions in place in the property market that what we are seeing is a torturously long-drawn out adjustment to prices. Whilst none of us has a crystal ball, I would say the consensus is that house prices will continue to fall for some time, maybe a year, maybe two to three.
So faced with the old dilemma of rent versus buy, we show here today two properties in Dublin. The first property is a basic-looking one bedroom apartment in Kilmainham with an asking price of €150,000. If you had bought this property in January 2012, then according to the CSO the average price of a Dublin apartment fell by 6.3% which equates to €9,450 in the case of a €150,000 home and assuming you are paying 3.5% net annual interest on a 100% mortgage, you would have seen your wealth decrease by a total of €9,898.
The second property is for rent at €8,000 per month. This is the highest asking price in Dublin city. You get a 9,500 sq ft (including roof terraces) six bedroom top spec home on four acres in Portrane.
Whilst the experience of one month isn’t necessarily probative of subsequent months price changes, it does show in a snapshot the disparity between renting and buying, and suggests renting provides better value for money. The aim of this little diversion is to indicate the scale of price declines. You should also bear in mind that individual properties and individual transactions may not be reflective of the market in general.
NAMA Wine Lake 
I’m not really sure of the point of these comparisons… you’d pay 96k for one year to rent the Portrane ‘CAD house’, almost two thirds the cost of ownership of the apartment.
@Conan, yes it is an artificial comparison for a number of reasons including the rent term. But the aim of these comparisons is to illustrate the magnitude of price changes. A 6.3% decline in the value of your property in one month is COLOSSAL. And one way of illustrating that magnitude is to compare the loss in value with what would be paid in a month for a place to rent. It has its constraints, and you identify one such constraint, but the intention is to illustrate the scale of declines in prices, and I think it is valid in that sense.
Okay, you’ve had your fun -and it is funny, but the CSO figures on a monthly basis are flaky -the 12 month fall across all property types generally line up pretty well.
The correct comparison might be -to buy an Allsop 2 bed, versus renting it. I think you’ll find buying was the better option.
@KOR1, it’s still a valid way of illustrating the scale of declines. The CSO indices are three month rolling averages which should limit the monthly blips but yes there can be short term volatility and looking at the house versus apartment prices and then the overall decline, the indications are that apartments comprise a much smaller element of the index than houses.
But even over a 12 months period there has been a 22% decline in apartment prices in Dublin or €44,000 on an average €200,000 apartment plus say €7,000 in mortgage interest. I’m pretty sure that a €4k/month or €48k/annum rental would still have seen you in far superior accommodation for the past year.
How would buying have been a better option?
Its A cash Buyers Market now and they (Prices above) Seem still on the High Side lads.
Disposal of Donegal Construction Company (With Loans transferred into NAMA) Land Banks underway with Property Auction Start of April. Will give a further indication on how far values/Prices have fallen in North West.