Homes cheaper to buy but is rent culture rising?

A leading local estate agent believes there may be a shift towards a European-style rent culture in Donegal, despite it being cheaper to purchase a property in the county.

Brendan McGee, of Franklins, also says there’s no housing shortage here, in contrast to media reports of spiralling prices and desperate house hunters queueing for properties in Dublin, Cork and Galway.

“It’s a different story in Donegal,” Mr McGee said this week.

“There is adequate supply across the county and sale prices here are still at figures less than the cost of construction.”

Quoting figures from DAFT.ie, Franklins states that there are currently almost 100 houses on the market in Letterkenny (55), Ballybofey (26) and Buncrana (12) in the €100,000-€150,000 price category.

However, Franklins estimates there are around 1,500 houses privately being rented in Letterkenny. An average four bed semi-detached in the Cathedral town costs around €750 per month to rent. Mr McGee says the same property would have mortgage repayments of around €675 a month.

He adds: “Historically, Irish people were home buyers, but now rents are higher than mortgage repayments, even in less urbanised counties like Donegal.

“It is understandable that people are renting more in places where they can’t afford to buy, but in Donegal it’s is actually cheaper month-on-month to buy a property than to rent one. That’s not to mention capital appreciation.

“Around 90% of our current stock would be much cheaper to buy than to build – you could not buy a site and replace those homes for the sale price currently offered.”

Admitting there are obstacles to buying, such as stricter central bank lending rules plus a requirement for a sizeable deposit, he added that the banks are telling them every day that they are open for business regarding mortgages to first time buyers.

“It’s almost like there is a fear among potential first-time buyers about entering the property market. Is it a case of them being traumatised by the crash and the experiences their parents may have had? Whatever the reason, the numbers speak for themselves when it comes to renting versus buying.”

With rental values increasing at a steady rate over the past few years, it is widely accepted this is the more expensive ‘choice’.

“However, from last week’s DAFT.ie figures, you can see that availability is not a problem in Donegal with many options in various locations. Renters should bear this in mind because along with the fact that lower monthly mortgage repayments are available it means there couldn’t be a better time to buy.”