Trapped in a negative equity nightmare after dreams of city apartment living turned sour
When Alison O'Riordan splashed out on a trendy pad, she had no idea that it would end up becoming her very own financial prison
IT was supposed to be the most exciting time of my life -- instead I've endured sleepless nights and bouts of anxiety and regret since that fateful day when I signed away my life without really knowing what I was getting into.
A year ago, I was ready to embrace apartment living and swap the leafy suburbs of Rathmines for life as a city slicker in the sought-after riverside location of Dublin 2.
"Contemporary designed apartments in an exceptional city-centre location" encapsulated it all for me.
Life was going to be good in the fast lane with what I envisaged would be an edgier and more cosmopolitan type of existence. I was a stylish professional, free from parents and time curfews, and now living in a bustling centre of activity: in my eyes, I had it all.
Surrounded by young hip singletons spilling out of the Ferryman pub in the Docklands on a Friday evening and an abundance of lively eateries and bars on my doorstep, what more could I want?
There would be no need to battle traffic on a daily basis with only a 10-minute stroll to work. I was young and childless, with not a care in the world in a rapidly changing part of the city.
When I bought my new home in May 2008, I knew exactly what I wanted. A two-bed apartment designed for modern living with a roof garden and outdoor space with great views of the city for holding summer barbeques on balmy evenings. When I saw just this, it accelerated my impulse to buy immediately, even though the market was softening.
The two-bed showroom unit apartment on the fifth floor wasn't exactly affordable, considering I was buying alone, but with its sleek Scandinavian furniture and skyline views I was prepared to stretch my cash limits and fork out the €525,000 sum required.
Printed in bold on the pastel-coloured brochure at the launch of the complex was the slogan: "contemporary tailored apartment living that won't cost you the shirt on your back". Truth is, it's costing me that and a hell of a lot more.
I now see my apartment devalue massively on a daily basis. Hooke & MacDonald have said 40 per cent is the typical price drop for new houses and apartments in Dublin. Trapped by negative equity, if I did decide to move, I would stand to make a massive loss on my investment. It has been reported that "those who bought a house in 2007 will have to wait until 2030 before they move out of negative equity".
I had a five-year plan of living in the city centre until I hit 30, and then I'd trade up and purchase the suburban house with the immaculate garden and the white picket fence -- all the trappings of a family home.
However, month after month I tirelessly continue to make bank repayments which will amount to a lot more than what the property is actually worth. It especially doesn't help
that in these early years all those monthly repayments appear to knock just fractions off the overall mortgage loan.
The initial ecstasy of making my first step onto the property ladder after a year of travelling and then landing my dream job have been replaced with pain and frustration
And with income slashed due to pay cuts and higher taxes, and rising utility costs, I really am finding it exceptionally difficult to make a living. Then there are the higher management company charges which individual apartment owners are facing because of the failure of developers to pay fees from apartments that have been unable to sell. A fifth of the apartments in my building remain unsold, the whole bottom floor is empty.
I didn't even buy at the peak of the boom, but at a time when I thought things had begun to come to a realistic level.
It was, however, weeks before the collapse in the middle of 2008, when prices tumbled. I ignored repeated warnings both from my parents and the Central Bank and instead ploughed in head first and handed over the money.
I have to look no further than beside my building to see just how much the market has collapsed. I could not afford the two-bed apartments at The Waterfront on Hanover Quay, Grand Canal Dock, Dublin 2, for €580,000 when I initially looked to buy. According to Mark Dunne of Hooke & MacDonald, they are now selling for an astonishing €450,000.
There would have been a lot let over in the kitty, let's say, for a more luxurious pad if I hadn't been so hasty.
When I was buying, parking spaces in my development cost an extra €45,000. You can imagine my fury when my neighbour informed me recently how the seller had thrown their car park space in for free at the same time as I had purchased in order to make the sale.
To make matters worse, in February I got a letter from the solicitors of the building informing me the current location of my car park space was to be altered in exchange for a car park space at the rear end of the car park.
I remember vividly looking on with envy at a friend at a bar buying rounds for everyone, boasting how he could afford it because of his generous variable rate in the current conditions. I was advised at the time by a number of knowledgeable people to go with a fixed rate of interest; the benefit at the time was the security of knowing exactly how much my mortgage would cost each month. And so with each successive interest rate cut announced by the European Central Bank since last October, my friend at the bar on the tracker mortgage has gleefully calculated how much extra disposable income he will have as a result, while I am locked into an expensive fixed-rate deal and all I can do is just grin and bear it.
The cost of breaking the fixed rate is €6,673 and my position is both depressing and far from unique. I will have 480 repayment instalments over the next 40 years; it really is an imprisonment of sorts.
But things could be worse -- imagine if I was extremely unhappy where I was living, had lost my job and couldn't afford my monthly repayments.
Then repossession would be on the horizon, and things would seem an awful lot worse. So I just have to remain calm and cross my fingers that things may improve -- but I won't be holding my breath.