ESB stands for Electricity Supply Board. Also offering electricity at rates roughly 13pc lower are the national gas supplier - Bord Gais - and also the country's largest renewable energy supplier Airtricity.
No way would I be buying right now. I ran an article on the topic in the February newsletter giving all the reasons NOT to buy, but offering advice if you do. The latest prediction to hit the news is that prices will drop 60pc from their peak before it's all over, which puts us less than 2/3rds of the way there.
Here's the full article from February.
A smattering of economists are predicting that the property market might turn this year. They cite bargain hunting German investors looking at highest end, income generating properties. Dublin prices have fallen more than 42pc since the madness peaked back in 2006. Countrywide, prices have dropped between 20 and 40pc.
Bargains! They say. And estate agents report that house viewings are strong and that people want to buy.
BUT… BUT… BUT…
BUT the banks aren't lending and prices are still dropping. According to the Taoiseach/Prime Minister, about 100,000 homes will come on the market this year, but there is only demand for 25,000. And that's not counting all the tens of thousands of home owners who haven't bothered putting their empty homes on the market because the prices are too low and they're waiting for a turnaround. The latest report puts the number of empty homes at 300,000, double the official figure. This doesn't even count empty rental apartments or holiday homes. At current rates of demand it'll take 12 years to clear the backlog, so long as no one dies, divorces or for any other reason puts another home on the market.
BUT the European Central Bank has announced it will be raising interest rates over the next year. (May note: now that the Euro is broke, this won't happen for another year.) And another 75,000 jobs are expected to be lost this year. Though the economy's rate of decline has slowed, she ain't hit bottom yet. Incomes are still falling. One in five renters and mortgage holders are in arrears. Until people feel secure about their jobs - ditto the banks - no one will be buying.
BUT the government has promised to examine taxing "principal" homes. There's a minor tax on second homes now, but property taxes on all homes are a tempting target for a government that’s already proved willing to sell its citizens to the bankers.
Nonetheless, if you've got your head up your BUT and are absolutely determined to buy, then I offer these guidelines.
Don't worry about rapid price increases. The easy credit that inflated the last bubble has been terminated. Hasta la vista, baby.
I've watched several of these boom-bust cycles in Southern California and they're always the same. It takes a while for the number crunchers to invent the next “new paradigm” which conclusively proves it will be different this time. Then the “smart money” piles in. News articles appear about the huge sums these lads are making and the local shoe shine boy gets into the act.
Valuations rise, everyone’s a genius and then… splat!
Don't even think about it unless you or your partner have a guaranteed income which can cover the payments even with another 10 to 20pc cut in wages and with the increased taxes and higher interest rates which will surely come. Do not count on two full salaries forever and ever amen.
Use the traditional standard. You can only afford a house if monthly payments are between one third and one fourth of your net income. Or, the total price should be no more than 2 and 1/2 times the annual salary of the household's bigger earner plus 1 times that of a household's second earner. By this measure, most house prices in Ireland are still miles too high! The average sale price nationwide is 242,000 Euro whereas they should be in the mid hundred thou range.
Make sure the home is energy efficient because the days of cheap oil are finished.
Bargain! Thousands of repossession notices are ‘hitting home’. Remember, only one in four homes on the market will sell - and behind those already on the market swells a tsunami of empty houses.
Most important, think of a house not as an investment but as a place you really, really want to live. Make sure it's in a neighbourhood you really, really love.
Because once you put your money down, you're stuck. You do not want to join the sorry ranks of the hundred thousand other home peddlers. Their mournful chorus wafts o'er the land: "I Cocked up. The banks took me for a Muscle head. Skint Alive, Alive-O."
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