Let's compare renting to buying, as both have their pro's and con's.

The arguments for owning your own home are:

• Once you have the mortgage paid off you will own an asset.
• You can live there forever, and never need to move.
• It’s yours - you can choose to decorate any way you want.
• You have a sense of being part of the community, and pride in owning your own home.
• You may benefit from capital appreciation.

Put together, the argument goes, home ownership gives you psychological and financial security that is, well... priceless?

Not always. Take a look at the advantages of renting in today’s market:

• It is now cheaper to rent than buy, and rents are falling due to oversupply.
• You can afford to rent in a “better” location for the same monthly outlay.
• You avoid a multitude of costs borne by owners ( stamp duty, management fees, buildings insurance, estate agent fees when selling).
• Someone else pays for the repairs.
• Renting is more flexible, making it easier to relocate for a new job or other changing circumstances.
• House prices can go down as well as up (and right now they are heading down).
• Buying in a falling market may leave you in negative equity.

Of course the decision to rent or buy is particular to your circumstances, but here is some guidance to help you make that decision:

Assuming you have a house in mind that you would like to buy, first calculate how much you would need to borrow, and the monthly mortgage repayment. How much would it cost to pay interest only (i.e. how much will you be paying in rent to the bank)? Then add in other regular costs such as management fees (if it’s an apartment or private road), mortgage protection insurance and buildings insurance, and estimate what these will cost you each month. This gives you the monthly cost of buying.

Next search www.daft.ie for a similar rental property in the area (similar square footage and number of bedrooms in similar state of repair). How does the rental cost compare to your projected monthly cost of buying? In most cases you will be paying 2-2.5 times the rental cost. If there is a premium to be paid for owning Vs renting, you need to decide if today’s premium is excessive.

Once you have reached that point you need to ask yourself is now the right time to buy?

• Will house prices fall further?
• How long to I plan to stay in the house?
• How secure is my job?

If you do not buy now, take a look at how much you can save (monthly cost of buying - rent) x 12). Calculate the interest you would earn with this cash in the bank . If you had this much more cash as a deposit next year and asking prices were 10% lower, what would your new purchasing power look like?

Any purchase in a rapidly falling market may leave you in negative equity unless you have a large deposit. Earning interest on your deposit and saving a larger deposit while renting and watching house prices fall is undoubtedly a more prudent way of ensuring maximum financial advantage. It also makes more sense to buy when prices have started to rise or at least stopped falling in order to minimise the risk.

Everyone has a different situation. This topic is all about finding what works best in yours. Do the sums before you buy and calculate what stability and pride of ownership is worth to you versus the freedom and flexibility of renting. Do not be swayed by “conventional wisdom” that buying a home is the only way to build your financial future.