Buy or Rent? Increasing Gap Between Buyers & Renters

Analysis based on numbers just released by DAFT.ie last month shows a growing financial gap between buyers and renters.  This gap is now higher than ever with rent over 30 years now costing up to €297,000 more than a 30 year mortgage for the same property.

Based on the most recent Daft DAFT Rental Price Report moneysherpa.ie analysed how rents now compare to the equivalent monthly mortgage payments on the same properties region by region. 

moneysherpa.ie found that in over three quarters of the country monthly rents tot up to over €100,000 more than the equivalent mortgage repayments over 30 years. With West County Dublin showing the highest difference at €297,000 more in rent paid over 30 years versus the monthly repayments with a 30 year fixed rate mortgage.


moneysherpa.ie analysis of Monthly Rent v Mortgage Payments

The region with the lowest gap between monthly rents and mortgage repayments was South County Dublin, however even there renting was over €37,000 more expensive than buying.

The Irish Central Bank imposed lending limit of 3.5 times salary is one of the strictest lending caps in Europe, with would-be buyers being forced to continue renting as they are unable to get a mortgage due to the bank’s rules. 

The combination of ‘trapped’ renters and a shortage of new rental supply has led to the spiraling rent inflation seen in the recent DAFT.ie report, with rents up 10.3% year on year on average across the country.

The moneysherpa.ie analysis takes the DAFT.ie rent data and compares it to the equivalent monthly mortgage repayment. Based on the 30 year fixed rate mortgage available from Avant Money for a home of the same value assuming a loan to value of 90%. 

Commenting on the analysis Mark Coan of moneysherpa.ie said 

“This analysis raises some significant questions about the current Central Bank lending rules, which are in effect creating a chasm between those who can afford property and those that can not.”

“Those that can meet the current lending rules, will pay over €100,000 less to live in their home for 30 years and create an asset that they can pass onto the next generation. “

“Those that can’t, even though they are paying a monthly rent that would be more than their mortgage repayments, are €100,000 worse off and will accumulate no assets after paying 30 years of rent.

 “With fixed mortgage rates now available for 30 years there is less risk of current renters defaulting on their mortgage than on their rapidly rising rents. The Central Bank lending rules have to change and change soon to reflect that new reality.” 

“The idea that relaxing the rules will inflate housing costs further is misguided, housing cost inflation is due to lack of supply and is already here in the form of rising rents. Relaxing the rules will simply allow more people to own their own homes and help become financially secure”

moneysherpa.ie has also developed a free online calculator that can be used to calculate how your own monthly rent would compare to a mortgage repayment.

Average regional rents, house prices and monthly mortgage repayments over 30 years. 

RegionHouse PriceMonthly RentMonthly MortgageMonthly DifferenceTotal 30 Year Difference
South County Dublin€625,801€2,258€2,154€104€37,380
West Meath€244,409€1,192€841€351€126,245
South City Dublin€446,415€2,145€1,537€608€218,997
North County Dublin€352,134€1,897€1,212€685€246,551
North City Dublin€370,992€2,006€1,277€729€262,422
City Centre Dublin€354,432€1,996€1,220€776€279,343
West County Dublin€329,858€1,962€1,135€827€297,556

Data based on Q4 Daft.ie House Price and Rent report and latest mortgage rates from moneysherpa.ie.

moneysherpa.ie is an independent personal finance websitend regulated by the Central Bank of Ireland and was founded by Mark Coan who previously held senior positions with the Irish Independent and Permanent TSB.

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