"It's now cheaper to buy than to rent"

Lead article by Charlie Weston in the Irish Independent today.
Mortgage payments are now lower than renting

A survey of 15 large centres around the country has found that it is now cheaper to buy than to rent a typical three-bed home.
Figures compiled by Daft.ie show that monthly mortgage repayments on a typical three-bed house were less than it could be rented for in 15 parts of the country.
In North County Dublin it costs €1,125 to rent a three-bed house, but it could be bought with an 80pc mortgage for a monthy repayment of €968.
In Galway city rents for three beds are typically €822 a month, but repayments amount to €771 for those with a 20pc deposit, borrowing for 30 years at 4.3pc.

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It's not comparing like with like.

A 20% deposit on a house is rather more than a month's rent as deposit on a rental agreement. Furthermore, it ignores the cost of furnishing, and the maintenance costs borne by landlords. In a MUD, the landlord also pays the service charges.

Overall the article is quite simplistic.

A rough calculation of the figures for Charlie Weston's 3 Bed North Co. Dublin property would be as follows

Cost €244,000.00
Deposit €49000,.00
Mortgage €195000.00
Repayment over 30 years @ 4.3% = €965.00
Purchaser will need to almost another €5,000.00 for Stamp duty, registration searches and Legal fees.
Purchaser might need to spend between €6 & 10K on furnishings and white goods etc.
Rent €1125 pcm.

Purchaser will be liable for Property tax, Insurance, ongoing maintenance costs, changing furniture etc.
If it was under a management you would find yourself paying a fairly high management fee.

the article was based on a 25 year term for buy and rent. while this makes sense for the buy option as you will then own the property it doesn't make sense for the rent.

your rent term will be double that, 50 years.

this is why you buy. somewhere to live when you retire and stop earning decent cash. if your public servant then you may have decent pension to continue renting but these group of people do not rent anyways (apart from the guy who came out in the papers last week

This is heading for a debate whether it's better to rent or buy which has already been discussed earlier this year.

http://www.askaboutmoney.com/showthread.php?t=185724

With the requirement for a 20% deposit looming, it is quite right to assume that the cost of renting will continue to soar and will greatly outstrip the cost of having a mortgage, of course there will be alot of variables.