It’s Sunday morning
It’s Sunday morning so, if you are following the relevant characters, you’ll be aware the usual Sunday morning economics debate has sprung up between our tweeting economists. I made a promise after the last time that I wouldn’t get involved.
Yesterday I had a long conversation with a friend about an apartment in Santry. Here’s why. It has an asking price of 125KE and it is a two bedroomed apartment in one of the Northwood blocks. What I have known about Northwood, hitherto, is that the prices paid for apartments in Northwood were the back end of completely irrational. Nothing against Santry, nothing against Dublin 9. Let’s face it, most of what was built in Sandyford was never worth the money paid for it either.
Anyway, assuming there was room to negotiate on price, here is a two bedroomed apartment in a reasonably okay area for around 100KE. Maybe 110KE if you’re really lucky. Current calculations suggest that the rent for two bedroomed apartments in Northwood (I’ve just checked on DAFT.ie) is around 1000E. This is above, by the way, what the DSW is willing to fund for people requiring that type of accommodation.
Currently, if you buy an apartment for 110KE with a mortgage of around 90KE, you’re looking at repayments of around 550E. When you compare that to the rent commanded, from an investment point of view (and for the first time since about 2001), this is not actually off the wall. Remember for most of the 2000s, new landlords were getting less rent in than they were paying in interest on the mortgages. This was because capital appreciation was all the rage.
I’m not interested in property for investment but I also have to look at it in the following context: provided I was happy to live there for at least 10 years, and wasn’t going to get hooked up to someone or have children or god forbid develop any more storage intensive hobbies, it would make far more sense to buy that apartment than rent it all other things remaining equal. This is not something I have seen too often in the last 10 years.
Now, I have other related issues regarding apartments. I don’t know what the parking is like; I don’t know what the build construction is like. I have one friend who reckons anything built since about 1998 can be forgotten about unless it was a self build. There may also be issues regarding kitchen space and certainly I would be making certain concessions regarding gardens and private parking. Plus there is also the grand piano issue. But if I were 10 years younger – and this is how these things should have been 10 years ago – it is not actually a bad move provided there are no issues with a) management companies b) sinkfunds and c) structural integrity of the apartment complex itself.
We have a long way to go before I will believe that the property market in this country is even half way rational. But this is the direction we need to be heading in: that two bedroomed apartments are actually affordable to a reasonable salary. One swallow does not make a summer, and all that.
However, the net result is I am looking at the market a little less jaundicedly lately. I may buy this year. I may not. I may cash in all my chips and do a round the world trip. After all, the whole being sensible concept in this country has been tossed up and down on a sea free of tranquillity. I think what people need to learn is to recognise what makes them happy and not necessarily what society expects of them.
