At €4,000 a month, my property earns more than I do
But we’ve been here before – it’s best not to be seduced by these numbers
“I find myself in a unique position. I’m a property owner who bought at the height of the market first time around.” Photograph: Cyril Byrne
Einstein famously said that the definition of insanity was going the same thing over and over again and expecting different results. Quite what he would make of Ireland’s return to boom-time property prices is anyone’s guess. Remember how just a short while ago, we laughed at the panic-buying of the Celtic Tiger era: purchasing off the plans, sleeping overnight in cars ahead of viewings, bidding wars, 110% mortgages? Well, it’s not so funny any more. Or maybe it is, if you were fortunate enough to buy during the market’s lean years. If that’s the case, you certainly have a nice little earner on your hands.
In any case, it transpires that my property is now earning more than I.
This week’s figures from myhome.ie are as eye-watering as they were 10 years ago. House prices are rising by an average of €4,000 a month, while the likely abolition of the Government’s help-to-buy scheme looks set to make things worse. That works out as a cent a second, incidentally. The report suggested property prices nationally rose 5 per cent in the second quarter of the year and were up 8.9 per cent year on year.
Property owners are evidently keen to get in on the new gold rush, and more than 6,000 properties were listed for sale in Ireland in May: the highest monthly total since 2008. And no wonder. Who wouldn’t want to benefit from a situation where you make money – and tax-free, too, if it’s your principal residence – for doing pretty much nothing?
Out of negative equity
Economists are also noting that prices could easily continue to rise for the next five to 10 years. Million-euro bedsit, anyone?
Of course, alarm begets alarm, and this is what is likely to got us into a bind. But the rising panic around this news doesn’t look set to quell any time soon. Amid the online kerfuffle, the Rubberbandits probably put it best: “12 London firms moving to Dublin post-Brexit. Hey Dubs, get ready to become culchies, because ye will not be able to afford to live there,” they tweeted. All that most people feel they can do is sit back and watch the drama unfold.
On the ground, buyers, bloodied but far from unbowed, are speaking a familiar language: “Well over asking price”; “Bidding storm”; “Not our dream home, but it will do”.
Right now I find myself in a unique position. I’m a property owner who bought at the height of the market first time around. Within six months of moving in, I saw the value of my apartment drop to about a third of its purchase price. Call it pure naivety, but it didn’t worry me as much as it should have. No matter, I thought at the time, I won’t be selling any time soon, and surely prices only really matter when you’re thinking of selling anyway?
But now, a blessed escape from negative equity is just over the hill. I mean, that’s a nice feeling.
Do I feel more secure? Relief? Not especially. These are not figures I take any real comfort in. I’m not a property mogul; never wanted to be. We knew this sort of thing as madness a decade ago, and as sure as night follows day, there will be a moment of reckoning. In fact it seems even more like blithe insanity now, because we know all too well what happens to property bubbles. And yet, we never seem to learn.
At the same time, I’m a renter in Dublin, soon to be looking for another property to live in. News of this gold rush has clearly reached my current landlord, so I will soon be at the mercies of the vagaries of the rental market. And, really, what a thing of wonderment that is right now. A one-bed apartment (with a single bed) in Rathmines, at €1,450 a month, has probably been rented by now. Elsewhere in the area, a two-bed apartment with (how best to put this?) fixtures and fittings that have seen better days, is available at €2,000 a month.
Looking on myhome.ie takes an iron stomach these days: beds wedged into sitting rooms, bunk beds, short lets galore (perhaps so a landlord can avoid the obligations that come with long-term tenants). And that’s before you get to the “sex for rent” ads (where a room is offered in exchange for sexual favours) that have started to crop up from time to time. When the figures start to rise, as they are doing now, the slimy opportunist landlord really does come into his own.
And when the rental market becomes this inhospitable for renters – who wants to be at the mercy of Irish landlords when things are like this? – thoughts invariably turn to buying. And when the market is this strenuously massaged, with demand far outstripping supply . . . well, you already know that tune.
I’m one of the lucky ones: I could return to my starter property if needs be. It would mean another set of renters would be back in the pool. Really, there are few winners here.
Unless, that is, you’re an investor who bought big during the lean years, or are a property owner planning to clock out of the Irish property market altogether. In that case, congratulations. You really are, as they say, in clover. But here’s a word of warning: perhaps it’s best not to get seduced by such numbers. €4,000 a month makes for a very nice little earner, but I wouldn’t bank on it. It’s an arbitrary figure in many ways, as likely to change as the capricious Irish weather. You only need to look back a few short years to know that.