The Benefits of Ownership

Security: Few would argue that having your own property is inherently a bad thing - it can be negative if you paid too much for it, and the asset you are purchasing is not liquid. However, the majority of people [if given the choice] would opt to own their own home. A home bought at the right price does offer an element of security, and one day when you become mortgage free, your ongoing living costs will be lower. The other thing to remember is that we are living longer and if you ever got to the point where a nursing home was required, a property can be vacated and rented to help supplement the cost, or sold to give a lump sum from which to pay for that care.

Emotional Factors: Since time immemorial, man has created a place to call 'home'. Even the hunter gatherers kept some pattern of shelter choice - in fact, only a tiny percentage of people on this planet lead 'nomadic' lives. For many people emotional factors may be the urge to have a place they call their own, or a place in which they raise, or hope to one day raise children. One way or the other, Irish people in particular are fond of having their own 'gaff'. Our owner occupier rates are amongst the highest in the developed world.

Capital Appreciation: This refers to the value of a property increasing over time, but be aware that this can work both ways - as an asset, property can also go down in value. However, for people who have bought a home, the fact remains that you have to live somewhere. If you bought at the right price to begin with, then you will weather downturns. If you paid too much you might be in negative equity which is unpleasant but not considered permanent. However, over long periods of time (and property can be a long term investment) the trend has historically been upwards in value.

The Saving Discipline: Despite the ongoing popularity of get rich quick schemes, the surest way to financial gain is through slow and steady saving and investment.

Most people find it difficult to stick to a disciplined savings plan. Even those who do save must resist the temptation to raid the savings.

Buying a house and making mortgage payments can be an effective way of enforcing a savings discipline on yourself.

A 250k mortgage over 25 years is effectively a pledge to save 10k a year. Interest will mean you spend more than that, but if you buy your house at the right price it should increase in value.

There are two practices that have been common in recent years which don't work as a savings plan.

Interest Only mortgages mean that you are not paying down the debt you owe. This means you are buying no equity in the house. It makes no sense to buy because "rent is dead money" and then spend as much or more on interest while not paying down your debt.

The other stumbling block to saving is paying too much or releasing equity. Both can lead to negative equity.

Community: Strong communities tend to be built around stability, and for many people a home is the first rung in a stable environment. Many economists feel that the way for a developing market to stand any chance of reaching maturity is through strong property rights.