Personal Finance

Barry McCall says readers should not be unduly concerned by the latest housing market statistics and St. Patrick's Credit Union explains how easy it is to become a new member.

Lies, damn lies and statistics

In the world of financial assets and property in particular, everything is relative. Most people have long understood the difference between the cost and the value of a property, as this explains the huge gulf in prices paid for virtually identical houses in different locations. Ultimately the value of a house is that which someone is willing to pay for it and it bears no real relation to its cost.

That said, the price you pay for your house is its cost to you because that is real money. And this brings us to the nub of the issue in regard to the near hysteria that seems to be gripping the nation at the moment in relation to property values.

The latest statistics tell us that the average price of a house fell by 2.6% in the first half of 2007 and that average prices paid for property fell by 0.5% in June. On the other hand, prices are still up 0.9% on June of 2006. Confused? Well, don't worry if you are because these statistics don't really matter to any of us.

Indeed, the best reaction to the current fall in house prices would be "So what?" More than 95% of Irish home owners have owned their residence for well over one year and the vast majority of them have owned their homes for well over five years. If you bought a home five or more years ago you will have seen its value not it's cost rise by anywhere between 60% and 100% depending on its location.

This means that you may have paid €250,000 for a home that was valued at around €500,000 at the beginning of this year. According to the latest statistics the value of such a house may have fallen by around €13,000 since the beginning of the year. This may sound a lot, but it's €13,000 the owner never had, earned or spent. All it means is that their house is now worth a mere €237,000 more than they paid for it rather than €250,000.

Of course, some very recent house buyers may find that their home is only worth slightly more than they paid or even slightly less. But should they worry? Probably not. After all, they more than likely bought the home because they needed a place to live and because they could afford the repayments, not because they were hoping to make a killing on the property market. If they can still afford the repayments and the home still suits them as a place to live they have little to worry about. They can continue to live there and wait for the market to turn again as it most assuredly will.

For anyone currently considering purchasing a home the same advice more or less applies. But it might be best to look to haggle with the builder or homeowner or continue to rent if you've got a good deal where you are.

St. Patricks Credit Union - New account number/member number for pensioners

If you are not already a member of St. Patrick's Credit Union (ESB Staff ) Ltd. then become one at your earliest opportunity - for your own financial well being!

The application process is quick and simple – just log onto the website www.stpatrickscu.ie and click on 'proceed to membership'. You can then download the Membership Application and Deduction at Source forms.

Complete these and send them to us along with copies of your passport/drivers licence and a recent document issued by the revenue commissioners showing your PPS number and current address.

The main benefits of joining the credit union are:

• Competitive dividend/interest paid on savings (3.5% last year)
• Lowest personal loan rate in the market at just 6.5% p.a.
• Free share insurance up to €7,700 in the event of death
• Free loan insurance in the event of death
• Free death benefit insurance of €3,250
• Commission free foreign exchange service
• Budget scheme to look after your regular household bills

For more details on this and other services offered visit our www.stpatrickscu.ie or contact the office on 01-6325100