Don't buy now -- estate agent's advice clashes with employer
A former president of the Irish Auctioneers and Valuers Institute has clashed with one of Ireland's biggest estate agents over crashing property prices.
Aidan O'Hogan, who is a former chairman of Savills estate agents, says prices are still falling and that young people should rent homes and not buy while prices continue to fall over the next few years.
However, Savills itself -- which employs Mr O'Hogan as a consultant -- has insisted that its advice to potential purchasers is the exact opposite of Mr O'Hogan's.
Mr O'Hogan said that rents fell much more than house prices and there was a huge selection of houses out there for rent.
He claimed house prices had fallen by 50pc and it would be a few years yet before they stopped falling.
He acknowledged that rent was "dead money", but said that the first three years of a mortgage was also dead money as initial payments went only to pay off the interest on the mortgage.
Buying now would mean young people were tying themselves to a mortgage deal at a time when they needed to be flexible as they may need to move jobs and would probably end up in and out of work.
Although he works as a consultant to Savills, Mr O'Hogan's views are not shared by the agency, which is not involved in the rental market.
Head of residential sales at Savills, Ronan O'Driscoll, said Savills' view was that people should buy rather than rent, especially as prices, particularly in the second-hand market in suburban areas, were beginning to bottom out.
But Mr O'Hogan disagreed.
"Young people should rent and not commit to a heavy mortgage when they do not need to. There is an enormous supply of stock out there," he said.
Last week a study by academics based at NUI Maynooth concluded that there were 300,000 unoccupied houses in the State.
Mr O'Hogan said that buying was a good idea for established couples who find a well-priced house in an area where they want to live, but younger people should remain flexible.
The Irish have an obsession with buying, but that does not make sense in the current market.
Mr O'Hogan acknowledged that interest rates were set to rise, while fixed rates were at historically low levels.
The property market would take five years to recover, said Mr O'Hogan, and then it would only return to 2002 and 2003 levels.
See 'Timing it right' in 'Your Money' Section, pages 34, 35, 38, 39