Should I sell my city centre apartment now?

Q: I am trying to decide what to do with a two-bedroom city centre apartment in Dublin I purchased in 2003 for €295,000.

I am just managing to repay the mortgage and debt associated with the property (including exorbitant management fees). I can only speculate that the apartment is likely to be worth approximately €210,000 now (as prices appear to have dropped to 1999 levels). I am currently renting it out as I will not live in Ireland for the next few years.

Should I sell and shoulder the remaining debt, particularly as interest rates are likely to rise? Is Nama going to be dumping a large number of apartments on the market (particularly in Dublin 8) in the coming years that will keep the prices of apartments depressed?

A:No one can predict when property prices will either bottom out or pick up, but one thing is for sure – the apartment market will take longer to recover than any other type of Dublin property, primarily because of oversupply. Another factor has to be buyer's preference – presented with a choice of a house or an apartment, Irish buyers will buy the house and that is not likely to change.

One small clarification: Nama will not be selling apartments, rather individual developers who are in Nama will come under pressure to pay back their loans and will have to sell their apartments at whatever the market price. Even right now, as you know, there is a considerable number of apartments for sale in Dublin 8. You don’t say where your city centre apartment is but your mention of this post code suggests that’s where you are.

We talked to an agent with Dublin 8 apartments on her books and she says that the only ones anyone is interested in are ones with parking – yours was one of those areas where there are some developments without parking and hopefully yours is not one of them. If it is, don’t bother putting in on the market. But just as you made your own decision when it came to buying you are going to have to make your own decision now about selling and the best way is by drawing up a list of Pros and Cons.

Just to get you started, the Pros of selling are: your management fees are high and will continue to rise; you may lose your tenant and will find getting another difficult; that rent could be lower than it is now, increasing the shortfall between it and your mortgage payments; the value of your apartment will not rise in the foreseeable future and may fall more; you live abroad and don’t need the hassle of being a landlord. The Cons of selling are: the price you get may be less than your mortgage so you will have to get a loan to cover the shortfall, so the apartment will still be costing you long after you cease to own it; you have a great tenant who isn’t going anywhere and things are ticking over so why bother?; you are in a good rental area so you will always get tenants; you may come home in a year or two and want to live in it.

Add your own personal circumstances to the list. Talk to an agent who’s active in the area – Dublin 8 is large and varied – and get an idea of what has sold in your development, how quickly and for how much.